Local Government Best Value
Jim McMahon Excerpts(1 day, 18 hours ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I have previously updated this House that this Government are committed to reset the relationship between local and regional government, and to establish partnerships built on mutual respect, genuine collaboration and meaningful engagement. Local councils must be fit, legal and decent and this Government are taking the action necessary to fix the foundations of local government and to support the sector to build to strength. Today, I am updating the House on the steps we are taking in partnership to support five councils to recover and reform: Spelthorne borough council, Warrington borough council, Nottingham city council, Cheshire East council and Newham borough council.
Spelthorne Borough Council
On 17 March, I informed the House that I was satisfied, having considered the best value inspection report, that Spelthorne borough council is failing to comply with its best value duty. Inspectors found that the council demonstrated a limited track record in proactively driving meaningful change and effectively implementing external recommendations. I proposed an intervention package to secure the council’s compliance with that duty and asked the council and others to provide representations by 28 March.
I received 12 representations which I considered carefully. I remain satisfied that the council is failing to comply with its best value duty in relation to continuous improvement, leadership, governance, culture and use of resources. I have concluded that it is both necessary and expedient for me to exercise powers in the Local Government Act 1999 as I proposed, with minor amendments. Today, I issued directions under section 15(5) and (6) of the 1999 Act to implement the proposed intervention package.
That intervention package, to be in place until 31 May 2030, comprises four commissioners appointed to exercise specific council functions, alongside specific actions the council is required to take. I am confident that this package will address the failings identified and is necessary for the council to secure compliance with its best value duty.
Given the importance of creating sustainable unitary local government for Surrey, there is a case for urgent and decisive Government action to protect the interests of Spelthorne’s residents and taxpayers, and the public purse. I have therefore appointed the inspection team: Lesley Seary as lead commissioner, and Peter Robinson, Deborah McLaughlin and Mervyn Greer as commissioners, due to their extensive knowledge and experience.
I have issued directions which, in summary, require the council to:
Prepare and agree an improvement and recovery plan within six months and publicly update commissioners on progress after the first three months, six months and thereafter every six months.
Ensure the council has sufficient skills, capabilities and capacity to implement the plan.
With support of commissioners, work with Surrey councils on issues in relation to local government reorganisation in Surrey.
Initiate a full and open recruitment exercise within one month for a suitable permanent appointment to lead the improvement work in the authority and progress against these directions.
Fully co-operate with the commissioners and undertake any exercise of functions that would avoid further failure, in commissioners’ opinion.
The scale of the challenge in Spelthorne means that they must take immediate steps to address their governance, commercial and financial challenges and to make transformative change across its entire operations. Commissioners will be able exercise the following functions:
those associated with the source of Spelthorne’s failures—to strengthen the commercial decision-making, regeneration, property management and procurement functions of the authority;
those associated with delivering financial sustainability by closing any short or long-term budget gaps and reducing the authority’s exceptionally high level of external borrowing;
those associated with any changes needed to the authority’s operating model and transformation of council services to achieve value for money and financial sustainability, taking account of any decisions relating to proposals for unitary local government in Surrey; and
those that will ensure the council has the right skills and structures to make ongoing improvements across the entire organisation—including governance and scrutiny of strategic decisions, and the appointment, dismissal and performance management for senior and statutory officer positions.
The commissioners’ appointments and directions take effect from today. The commissioners will provide their first report in six months, with further reports every six months or as agreed with the commissioners.
As with other statutory interventions led by my Department, the council will meet the costs of the commissioners and provide reasonable amenities and services and administrative support. The fees paid to individuals are published in appointment letters on gov.uk. I am assured this provides value for money given the expertise being brought and the scale of the challenge.
As the council works with other Surrey councils on proposals for sustainable unitary local government for Surrey, creating simpler structures that will deliver the services that local people and businesses need and deserve, the needs of Spelthorne are likely to change throughout this period. Although commissioners will not input into local government reorganisation proposals before submission on 9 May, they will provide their views and oversight for the next stage. I have appointed the commissioners until January 2026: they will provide the requisite oversight, expertise and grip on Spelthorne’s position. I will also review at the appropriate time the directions and the commissioners’ roles, to ensure that Spelthorne has the support required to accelerate recovery and protect the public purse.
As always, I remain committed to working in partnership with Spelthorne borough council to provide whatever support is needed to ensure its compliance with the best value duty.
Warrington Borough Council
Best value inspection report
A capital review of Warrington borough council conducted by the Chartered Institute of Public Finance and Accountancy highlighted concerns around governance and decision making and following this, on 8 May 2024 the then Secretary of State (the right hon. Michael Gove), commissioned an inspection of the council’s compliance with its best value duty. Paul Najsarek was appointed lead inspector and was later joined by Richard Paver and Michael Hainge. The inspectors submitted their report to the Secretary of State, and I am publishing this today. I am grateful to the inspection team for their thorough work, and to the council and all participants for their co-operation.
The report identifies strengths within the council, including within children’s services and public sector partnerships and community engagement. However, it documents serious concerns:
On continuous improvement: The report describes “resistance” in the council’s response to external challenge processes. The inspectors are not confident the council has the “will and capacity” to make the necessary changes without external intervention.
On leadership: The report identifies a lack of strategic direction and “low challenge culture”. The council’s priorities are not aligned with its revenue budget and commercial programme challenges.
On governance: The council’s commercial programme lacks transparency, with key decision-making “disproportionately influenced by a small group of officers”. Despite concerns raised by external bodies, meaningful reforms have not been implemented. The absence of audited accounts since 2018-19 further leaves the council in a precarious position.
On culture: The report highlights that “members are highly respectful of powerful officers and there is a defensiveness to internal and external scrutiny”. This culture has contributed to a high-risk commercial programme, leaving the council “in a very exposed position”.
On use of resources: The council manages a complex, high-risk borrowing and investment programme without a clear strategy or the required expertise. It faces “an increasingly precarious revenue budget position with rapidly diminishing reserves”. The inspectors raise concerns about a potential breach of PWLB guidance.
Compliance with the best value duty
I have carefully considered the report and other relevant material, including the CIPFA review and the Local Government Association’s corporate peer challenge. I am satisfied that Warrington borough council is failing to comply with its best value duty in relation to continuous improvement, governance, leadership, culture, and use of resources. I am therefore minded to exercise powers of direction under section 15(5) and (6) of the 1999 Act to implement an intervention package that ensures the council’s compliance with its best value duty.
The proposed intervention includes the appointment of ministerial envoys who specialise in leadership, governance, finance and commercial investment. This proposal represents a further evolution of our approach as this Government continue to test and learn how best to support councils to recover and reform. As part of our commitment to reset the relationship with local and regional government, I am seeking to develop the “envoy” model, which prioritises building a council’s own capacity to improve, by supporting its recovery primarily with expert advice, rather than taking over functions.
Under this model, my clear expectation is that the council will remain responsible for driving its own improvement with the support, challenge and advice from the ministerial envoys. To safeguard the process, some envoys will have power to exercise certain and limited functions to be treated as in reserve, intended to be used only as a last resort to ensure compliance with the best value duty. The proposed approach balances the evidenced need for government support with the leader’s commitment to work constructively so that we see sustained, long-term improvement.
I propose the intervention will be in place for five years, but should there be sufficient evidence of progress, functions will be handed back to the council earlier. The council will be directed to prepare and agree an improvement and recovery plan and progress against the plan must be demonstrated, through regular reports from the ministerial envoys.
Representations
I am inviting representations from Warrington borough council and any other interested parties, including residents, on the inspection report and proposed intervention package, by 22 May 2025. I have taken steps to ensure that this report will be seen by councils who are working together on proposals for devolution.
I will carefully consider all representations before deciding how to proceed. The proposal to intervene is not taken lightly but is designed to strengthen and accelerate improvement to ensure the council delivers for its residents and in partnerships. With council focus and support from the ministerial envoys, I expect the council to demonstrate the swift and sustained progress necessary to ensure compliance with its best value duty.
Nottingham City Council
Nottingham has been in intervention since January 2021; and commissioners were appointed in February 2024, led by Tony McArdle OBE. I am today publishing the commissioners’ latest report, received in March, which highlights good progress in planning, including the development of the strategic plan, medium term financial plan, and improvement plan. It is clear that the council continues to work closely with the commissioner team to move itself towards a more sustainable position. It is vital that this continues, with the full support of both officers and members throughout the organisation, and that the full range of reforms at the council must now be embedded alongside the collective work on developing proposals for local government reorganisation. I look forward to receiving the commissioners’ update in August.
Cheshire East Council and Newham Borough Council
Finally, I am updating the House on steps we are taking in relation to Cheshire East council and Newham borough council.
After carefully considering the relevant evidence, my Department has today issued these authorities with best value notices. These are not statutory interventions but provide a formal notification of the Department’s concerns. We found no evidence of current best value failure at the councils, but significant issues need addressing at pace to avoid future failure.
The councils are expected to continue driving their own recovery and are requested to engage with the Department for assurance of improvement. The notices will be in place for 12 months, after which progress will be reviewed. I am pleased that both councils are already supported by independent improvement boards, established with the LGA. I urge the councils to make full use of their boards’ expertise, and the Department will seek updates from them.
Conclusion
I am committed to working in partnership with these councils to provide the necessary support to ensure their compliance with the best value duty and the high standards of governance that local residents expect.
I will deposit in the Library of the House copies of the documents referred to, which are being published on gov.uk today. I will update the House in due course.
[HCWS620]
Havering Borough and Essex Devolution
Jim McMahon Excerpts(2 days, 18 hours ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I am grateful to the hon. Member for Romford (Andrew Rosindell) for securing this important debate and raising the question of Havering borough’s place in relation to devolution in Essex. I pay tribute to the hon. Member for championing his area and for the very clear passion that he has for the place he represents. One thing that is special about Parliament is that connection and the pride with which Members speak about the place they live in and represent, and I absolutely heard that in every canter through the historic county of Essex and just how rooted it is in that kind of county, ceremonial, historic identity. I accept that completely.
Although our reorganisation in Greater Manchester was a bit later, in 1974, many of us still feel that we are Lancashire to our heart, even though we are part of the Greater Manchester combined authority, and I think it is possible to be proud of both. We are proud in the way that we look to Manchester and the success of that city region, but proud too of our historical roots in Lancashire, so I think the two are possible.
The hon. Gentleman might find it useful to know that one of the first things that we did upon coming into government was change the way the county flags are flown. For a very long time, the Department that I represent held all the historic county flags for England in the Department, and whenever the historic county day came up through the course of the year that flag would be flown from Marsham Street, at what I would say is a very average office block. I did not think that that quite gave status to the historic counties, and it did not give the opportunity for Members of Parliament and visitors to see the county flags. They have been transferred to Parliament, to the Speaker’s Office. In addition to Counties Week, 21 to 27 July, when all the county flags of England are in Parliament Square, the county flags will be flown in New Palace Yard on the day of each county. I think that is the appropriate place and I hope Members will search out their flag on that day. Identity and belonging is really important.
As hon. Members will be aware, the Government have made it a clear mission to extend devolution to all corners of England, while fixing the foundations of local government. Our work with councils across Greater Essex demonstrates the strength of that ambition, as we endeavour to establish a new county combined authority for the area while delivering local government reorganisation.
The Government recently conducted a public consultation on our proposals to establish a mayoral combined county authority across Essex county council, Thurrock council and Southend-on-Sea city council, as part of the devolution priority programme. Responses to the consultation are currently being assessed and I will shortly make a decision on whether to proceed with the necessary legislation, subject to further consent from the councils involved. The three existing council areas firmly form the currently proposed footprint for the future devolution of Greater Essex, as the consultation was conducted on that basis.
The three councils, along with the district and borough councils across Essex, were also invited in February to submit proposals for a new unitary structure for the county. As requested, they submitted an interim plan in March and we provided feedback to support the development of final proposals, which are now due in September. It is for the local councils to develop those proposals and for the Government to assess them on that basis. It is currently not envisaged that the boundaries of Greater London will be changed, or that the proposed Greater Essex mayoral combined county authority will be expanded, although the latter would be possible at a later date should it be locally desired and should statutory tests be met.
As for changing the boundaries of the councils themselves across Greater Essex, that will be for the councils to propose if they wish, as they develop and submit proposals to the Government for unitary local government in that area. We remain open to discussions with any council across England on its vision for its region, and we continue to encourage discussions across councils and areas as we deliver on our ambitious agenda for local government.
I hope that this brief and by no means exhaustive summary of our plans for Greater Essex devolution and local government reorganisation has provided helpful context to the hon. Member for Romford. I understand completely his point about Havering being anchored in Greater London, but I hope he takes some reassurance that the guidance we sent out throughout the process has anchored two things that he touched on in his speech.
First, the administrative boundaries being drawn are about efficiency and the importance of having a single tier of local government that people can hold to account and that is sustainable in the future. But it is in no way intended to cut across the identities that people feel and are proud of. No council should try to cut across the historic identity that local areas feel.
Secondly, every council, regardless of size or where it is in England, should always root itself in local communities and local neighbourhoods. The days of councils being disconnected and removed from local communities are long gone, and that empowers local councillors to be the frontline community convenors that they stood for election to be.
Question put and agreed to.
Birmingham City Council
Jim McMahon Excerpts(2 weeks, 3 days ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
Industrial action continues to affect waste disposal services at Birmingham city council. The Government have repeatedly called for Unite to call off these strikes, and accept the fair deal on the table.
The major incident that the council declared, because of the risks to public health caused by interruptions to this vital statutory service, remains in force. The Government have taken decisive action to support the council in using the tools that it needs to ensure waste in the city can be safely and sustainably managed.
The statutory intervention in Birmingham city council is led by commissioners, who are supporting the council to undertake functions of local government in the city, including waste disposal services.
The Government have provided extensive and ongoing support to the city council to ensure the welfare of the citizens of the city. At the council’s request, the Government have deployed operational and logistical expertise to assist the council in addressing the accumulated backlog of waste on the city’s streets. That backlog presented real risks to public health, and especially that of the city’s most vulnerable and deprived residents, who should not have to endure the presence of piles of waste on streets, in parks and in other public spaces.
As a result of this concerted and ongoing effort, and with the assistance of other councils, private operators, and the endeavours of many determined workers who have put in long hours, over 26,000 tonnes of waste have been removed, and rubbish levels are approaching normal. More than 100 bin lorries are out every day; regular bin collections have resumed, and the council continues to monitor the situation closely to ensure waste does not build-up and to fight opportunistic fly-tipping.
I want to thank Birmingham city council for its continuing work to get the streets clean and to bring the dispute to an end. It must confront the challenge of modernising its waste disposal service so that it works for the people of the city and does not store up irresponsible liabilities for the future. While it is for the council to work through this with Unite, the Government support the council in its efforts to maintain the progress on resolving the equal pay injustice which saw thousands of women workers paid less than their male counterparts over many decades.
The council has put a constructive and reasonable offer on the table that protects the interests of the citizens of Birmingham, and of the council’s own employees in the waste disposal services.
The deal on the table is a good deal. The council has worked hard to offer routes to maintain pay comparable roles, and in some cases to upskill and increase workers in scope. The ongoing and extensive clean-up and maintenance operation will continue until the industrial action is suspended.
The Government will continue to be on the side of those people, and to support the council in its journey to create the sustainable, fair and reliable waste service that residents in Birmingham deserve.
[HCWS592]
Birmingham: Waste Collection
Jim McMahon Excerpts(2 weeks, 3 days ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Kevin Hollinrake (Thirsk and Malton) (Con)
(Urgent Question): To ask the Secretary of State for Housing, Communities and Local Government if she will make a statement on the disruption to waste collection and the deployment of the military in Birmingham.
The Minister for Local Government and English Devolution (Jim McMahon)
Before I start, may I recognise, on his passing, the significant contribution of Pope Francis? Also, as the Minister for Local Government in England, I wish everyone a happy St George’s day for tomorrow.
Members across the House will be aware of the continuing disruption caused by industrial action in Birmingham. The Government have repeatedly called for Unite to call off the strikes and accept the fair deal that is on the table. The commissioners and the council are undertaking the necessary reforms in the context of a challenging financial situation, with the legacy of equal pay, when women workers were systematically paid less than their male counterparts in similar roles. Though the council must chart that course itself, our actions speak to our determination to ensure the welfare of the citizens of Birmingham.
We have been providing intensive support to the council in its efforts to address the backlog of waste that has been building up on the city’s streets, and significant progress has been made in the last fortnight through a concerted effort and with the assistance of other councils, private operators and the endeavour of many hundreds of determined workers, who have worked extremely long hours. The result is that 26,000 tonnes of excess waste have been removed and levels are now approaching normal. More than 100 bin trucks are out every day and regular bin collections have resumed. The council continues to monitor the situation closely to ensure that waste does not build up again.
This is a Government who stand up for working people. The industrial action is in no one’s interest because the deal on the table is a good deal. The council has worked hard to offer routes to maintain pay through transferring workers to comparable roles and, in some cases, to upskill those workers in scope. There may of course be details to iron out, but that is why talks are so important. As we have repeatedly made clear, Unite should suspend the strike, accept the deal and bring the dispute to an end. The Government will continue to be on the side of the people of Birmingham and to support the council in creating the sustainable, fair and reliable waste service that its residents deserve.
Kevin Hollinrake
It is astounding that the Secretary of State, having had to resort to calling in the Army to cover her blushes for her failure to resolve the situation, was not intending to make an oral statement to the House and had to be dragged before it by means of this urgent question. She is failing—failing to stand up to the unions, failing to protect the residents of the UK’s second city and failing to protect the reputation of our nation—and now resorting to being bailed out by our brave armed forces, which I note the Minister did not even mention. It is a national embarrassment.
I realise that the Minister and the Secretary of State were not born until 1980, but many in this House and in the wider country remember very well the 1970s and the winter of discontent. It is clear that with this Government we risk going back to those days. To prevent that from happening, I offer the Minister and the Secretary of State our support, if the Minister will clarify and confirm the following. What is the projected cost to the taxpayer of the military’s involvement? Will he rule out the humiliation of service personnel ever having to collect refuse? Will he commit to using provisions in the Strikes (Minimum Service Levels) Act 2023 to ensure that residents receive a basic level of service, and to reinstate legislation that would allow the council to commission agency workers to clean up the city until the strike is resolved?
Jim McMahon
If that is a dog, it is more like a Bichon Frisé attack on the Government I’m afraid—it really did not land. What do people in Birmingham want? In the context of an unacceptable situation, where rubbish is accumulating, the people of Birmingham want it to be resolved. What they have in this Government is a Government who do not pray in aid party politics or councils’ rows in the way the previous Government did. What we do is work together in partnership for the end that is important—[Interruption.] Conservative Members have been carping from the sidelines—they have been doing this for weeks now—and they have offered every criticism but not a single solution. We would be forgiven for believing that they had not been in power for 14 years, when Birmingham was sent to the wall. We are, of course, appreciative of our colleagues in the MOD for the support that they have offered, and the three logistics advisers have made a difference. However, as they themselves have said, Birmingham is more than capable of making sure that the rounds are collected, and the trucks are on the road as of this week. That mutual support is important.
I need to pull up the hon. Member for Thirsk and Malton (Kevin Hollinrake) on a comment that he made earlier. He spoke about the “humiliation” of collecting waste from the streets, and the “humiliation” of decent working-class people going out to provide a public service to millions of people across England. It is not a humiliation; it is a public service, and one that is critical to our nation’s interests. To say that the job is a humiliation— I would say that working-class people, the bin collectors across this country, take pride in their work, and they deserve more respect from the bloody Opposition.
Mr Speaker
I call the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I associate myself with the Minister’s remarks on the passing of Pope Francis. May his soul rest in perfect peace.
It is important for us to remember the innocent residents who are caught up in this dispute, and the fact that they have been suffering for many weeks without that refuse being collected. I think about the many families who had to celebrate Eid while seeing all that rubbish continue to pile up. In just over four weeks there will be another half term, and again many families will be at home. It is important that the Government continue to work closely with Birmingham and all parties to make sure that this is resolved.
The Minister outlined some of the concerns around the funding pressures that councils of all political parties have faced over the past few years. He will know that he and the Government have handed out exceptional financial support for a number of councils, and a number of councils continue to face challenges with their finances. Can he assure the House that in discussions with Birmingham council and others, we will continue to support hard-working local government officers, ensuring that their finances are again fit and proper, so that we do not face situations such as the one we see in Birmingham?
Jim McMahon
I thank the Chair of the Select Committee for that question, which in a way goes to the heart of the fragile situation that we inherited as a Government. After 14 years, Birmingham, and in fact many councils of all political stripes, had been sent to the wall by the previous Government. The number of bankruptcy notices that were issued is testament to that. We have been able to stabilise the sector through the recovery grant—the first time ever that that grant was issued, and Birmingham was the largest beneficiary. We have given that city the support it needs, but we want to ensure that the progress we have seen over the past couple of weeks is maintained. I completely appreciate that there were unacceptable scenes where waste has built up on people’s streets. That is not okay in normal times, and it is certainly not okay in half term, when children are playing in their local parks and on their streets. That is why we moved quickly to ensure that that waste was removed. The fact that 26,000 tonnes has been removed shows the dedication of those frontline workers.
Vikki Slade (Mid Dorset and North Poole) (LD)
I refer the House to my entry in the Register of Members’ Financial Interests.
It is unacceptable that this dispute has dragged on into a ninth week. Even more disgraceful, the people of Birmingham are now forced to clean up their own streets. I thank those who gave up their Easter holidays to pick up rubbish for their neighbours but, let us be honest, they should never have had to do it.
This goes way beyond Birmingham. It started with an equal pay claim that bankrupted the council, and with widespread local government reorganisation ahead of us all, what will stop it from happening again? As councils merge, staff will sit side by side doing the same jobs but on completely different pay from each other. That is unjust, unsustainable and a ticking timebomb. Six years after the reorganisation of Bournemouth, Christchurch and Poole council, which I led, pay harmonisation is still going on. We could not afford to meet everyone’s expectations, and neither can most councils, which teeter on the edge. What is the Minister doing to stop this from spiralling elsewhere and to protect residents from eye-watering tax hikes or devastating service cuts?
Jim McMahon
I want to be careful not to stray too far from Birmingham, which is not affected by local government reorganisation. However, it is completely usual, when looking at the transfer of the workforce, for negotiations to take place with workers and trade unions to harmonise terms and conditions and pay. That will take place in the usual way. We need to be careful not to set hares running unnecessarily.
The issue in Birmingham—the foundational issue, in a way—is equal pay. For far too long, women workers were paid far less than their male counterparts for comparable roles—that went on for decades. The council has to resolve that, as other councils did many years earlier. Women cannot continue to be paid less than their male counterparts. In the end, this is about harmonisation done in the right way.
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
I thank the Deputy Prime Minister and the Minister for their support in addressing the public health concerns in Birmingham. As the Minister says, 26,000 tonnes of waste has now been cleared, and weekly collections will resume. I put on record my thanks to everyone involved in the clean-up, including many volunteers—they are the best of Birmingham. Does the Minister agree that it is right that the council resolves equal pay issues, with over 7,000 women now due compensation? That is precisely what the deal on offer does, while ensuring that no worker has to lose pay.
Jim McMahon
That is precisely the issue with the WRCO—waste recycling and collection officer—role that started the strike action to begin with. An enhanced payment was made for that role that did not stand, when it went through job evaluation, compared with women who were doing similar roles elsewhere in the council. That cannot stand. There must be a red line whereby no agreement can be reached if it compromises the council position on equal pay and builds up liability for the future. I absolutely pay tribute to the community groups and frontline workers who have made sure that the response to the clean-up has been one of co-operation.
Sir Andrew Mitchell (Sutton Coldfield) (Con)
Will the Minister make a point of thanking the well-run and cost-effective Conservative councils that have either helped or offered to help clear up this terrible mess? Will he bear in mind that it is not just the bin strike that my poor, long-suffering constituents in the royal town of Sutton Coldfield have had to endure, but the pending closure of our libraries and the massive hike in council tax? Does he understand why so many of us want to see a proper judge-led inquiry into how bankrupt Birmingham city council has got Britain’s second city into this mess? Will he also bear in mind that this is a dispute between two wings of the Labour party? Whatever I may think of the council that he leads, it is quite wrong that my constituent, the leader of the council, should have had a photograph of his house put on social media by Unite. Will the Minister condemn that action by Unite?
Jim McMahon
Let me be clear: over the past few weeks, photographs have been taken of the houses of union officials, and the same trade union has used photographs of the homes of the council leader and cabinet members. Neither of those things is okay. This is already a fraught dispute. It requires the good faith of all parties, and negotiation through being in the same room and talking through the issues in the interests of the workers and the people of the city of Birmingham. Our hope, and our expectation, is that, although what has happened has happened, a line is drawn and we can move forward in good faith.
Tahir Ali (Birmingham Hall Green and Moseley) (Lab)
I refer to my entry in the Register of Members’ Financial Interests. The crisis over bin collections in Birmingham has dragged on for far too long, and my constituents have suffered significantly as a result. While I understand the financial pressures on the council, clearly it is unreasonable to expect any worker to accept a pay cut. Will the Minister commit to taking all steps possible to encourage good faith negotiations between both parties, so that a fair deal can be reached and this vital service can be restored without any further disruption?
Jim McMahon
I do not think there is a single example—although I am prepared to be corrected—where equal pay has not had winners and losers on the edges. That is an element of equal pay that we have to accept. The envelope is not limited, so the books have to balance.
On the issue of how the WRCO role is being changed and whether workers need to lose pay, the council is offering a sideways move in the street scene division on the same grade 3, which will mean no loss of income. It is offering workers a move to an equivalent grade 3 role even if training is required, and it will provide that training. It is also offering LGV driver training, so that loaders can upgrade to being a driver, which carries a higher payment than their current role.
Ayoub Khan (Birmingham Perry Barr) (Ind)
I recall asking the Minister on a previous occasion about getting support from military personnel, and he said that I had gone “from zero to 100” very quickly. The difficulty with this Government is that they have been very slow to react. I was out last Thursday picking up bin bags with youth workers from a local organisation who had worked 12-hour shifts and were then spending their evenings cleaning up the streets. The Minister has failed to raise the fact that thousands of tonnes of recyclable waste have not been collected, encouraging further fly-tipping. When will this Government intervene and resolve the issue? Bin workers work hard. Up to 200 of them will lose up to £8,000, and that needs to be resolved.
Jim McMahon
I share the hon. Member’s appreciation of community volunteers who are cleaning up the streets, just as I welcome the hard work of hundreds of frontline council workers who have stepped in. Their efforts have meant that 26,000 tonnes of accumulated waste has now been cleared. We can agree on that, at least.
On the question of when it is appropriate for the Government to offer support, it is when a major incident is declared. As the hon. Member will know, I have been in Birmingham every week since then. There have been daily update calls with the council, and we have been providing essential support to the council to clear up the city.
Laurence Turner (Birmingham Northfield) (Lab)
I thank the Minister for his efforts to keep Birmingham MPs informed on a cross-party basis during this dispute. I would also like to associate myself with the condemnation of the publication of photographs of the houses of some of the parties to the dispute. My residents in Birmingham Northfield want to see a service that is not the same as before the strike; it must be better, and I know the Minister shares that ambition.
We have heard today about the 1970s. It is not so long ago that a Conservative Secretary of State stood at the Dispatch Box and said that he was delighted to announce 12% cuts to Birmingham’s budget—the sharpest of any unitary authority. Does the Minister agree that the one word missing from the shadow Secretary of State’s question was “sorry”?
Jim McMahon
We have been here repeatedly for questions, statements and even urgent questions in the House, and on not a single occasion has the shadow Secretary of State or shadow Ministers accepted their role, after 14 years of government, in driving councils of all colours to the wall. We need to bear in mind that commissioners were brought in under the previous Government, and Birmingham had to declare bankruptcy under the previous Government. The only difference now is that it has a Government on side willing to meet it financially—that is why the recovery grant was so important—but also in spirit and through our actions, which is why we are working in partnership to clean up the streets and get Birmingham clean.
Bradley Thomas (Bromsgrove) (Con)
Which legacy is the Minister most proud of: rubbish and rats in Birmingham, or Labour’s breach of its promise to the electorate to freeze council tax?
Jim McMahon
I am sure that sounded a better question when it was being drafted this morning. I do not think anyone takes pride in the strike action and the waste that accumulated on the streets. This is a very serious issue. It is unacceptable that a major incident had to be declared and that public health concerns were so prevalent. That is why we took quick action. It is why the streets have been cleaned to the tune of 26,000 tonnes, and it is why there are more daily collections taking place now in terms of tonnage than there were in routine times—to make sure they catch up and do not slip back—but we recognise that, in the end, the only solution is to deal with the underlying strike action that is causing the disruption.
John McDonnell (Hayes and Harlington) (Ind)
I refer to my entry in the Register of Members’ Financial Interests. I am a member of Unite, and I am very proud of that; I think four generations of my family have been members. Not to rise to the provocations of Conservative Members, but there is a difference between having three military advisers and having troops on the streets. The latter would be seen as an act of provocation and a worsening of the situation. May I suggest that the Minister or the Secretary of State convenes the meetings between the council and the union to secure progress in the negotiations?
Jim McMahon
There has been almost daily communication with the council, and the trade unions have made representations, too, but we need to be clear about appropriate roles and responsibilities, and about the lines of accountability. The council, not the Government, is the employer of the workforce in Birmingham, and it is for the employer and the employees to reach an agreement that both can accept. We urge both parties to negotiate in good faith. We believe that the deal on the table is a good deal. The right hon. Gentleman is correct to say that workers have the right to make their representations, but the council has to take into account all its workforce, including over 7,000 women, who historically were paid far less than their male counterparts for equivalent roles. That is the foundational issue at the heart of the dispute.
Wendy Morton (Aldridge-Brownhills) (Con)
Despite assurances from the Dispatch Box before the Easter recess, we continue to see piles of rubbish on the streets in Birmingham. The costs are mounting, and the rats—the squeaky blinders—continue to roam the streets of Britain’s second city freely, so I ask the Minister again: what are his Government and Labour-run Birmingham city council doing to bring an end to the strike? Enough is enough—residents want an end to the situation.
Jim McMahon
Work is still taking place. I should address the question about rodents, because that is a serious issue. Nobody wants to see rats in the streets, particularly around the accumulated waste. We welcome the council’s decision to suspend the charge for calling out pest control, so that households that report rodents are not financially disadvantaged. On the Government’s response to the situation, from day one we said that the accumulated waste was unacceptable and a public health hazard. The Government stepped in to support the council, to ensure that we could get more trucks out of the depot, increase the amount of waste collected and regularise the number of routine collections. I am pleased that progress has been made, but what will ultimately resolve the dispute is the trade unions and the council reaching an agreement that brings the strike action to an end.
Jim McMahon
We can certainly agree that people have the right to strike, but people also have the right to go to work. We saw a restriction of the number of bin trucks that could leave the depot, which had a significant impact on the amount of waste that could be collected. The direct result was the accumulation of tens of thousands of tonnes of waste on the streets. In the end, we really want Unite, as the negotiating body for the workforce it represents, and Birmingham city council, as the employer, to get around the table on the deal that has been tabled, to iron out the differences, if there are any, and to reach an agreement. If that will take longer, we strongly encourage Unite to suspend strike action during the negotiations.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Birmingham city council is the largest local authority in the UK by population. Sadly, for many years it has struggled with severe problems that impact its residents. The Government have engaged in local government reorganisation across much of the country. Large parts of the area covered by Birmingham city council may be better administered by bodies elsewhere, outside the boundaries of the city. Will the Minister look at whether it is time to review the boundaries of Birmingham city council? The council is so large that it cannot function properly for its residents.
Jim McMahon
I do not think that anyone could criticise my work ethic, but reorganising a third of England and the 20 million residents affected would be quite a reorganisation to deliver. As things stand, there is no intention of reorganising Birmingham, but there is absolutely an intention of resolving the underlying trade union dispute, getting people back to work, and reaching an agreement that is acceptable.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
May I point out that the strike started under this Labour Government, and under a Labour council—and despite all the Minister’s hand-wringing and anguish, the strike continues under a Labour Government, and under a Labour council? It is futile for the Government to pretend it is all somebody else’s fault, least of all the fault of the previous Government. Will the Minister avoid misrepresenting what my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) said? He made the perfectly reasonable suggestion that the Minister should reinstate the legislation that would allow agency workers to be brought in to pick up rubbish off the streets of Birmingham. Why will the Minister not do that? Because he is pussyfooting around and kowtowing to his Labour paymasters, the trade unions.
Jim McMahon
That certainly gets the award for the silliest question yet. There is no kowtowing or bowing. We played this with an absolutely straight bat in the interests of the people of Birmingham, as they would expect. On agency workers, our judgment is that they are not required, because the mutual aid from neighbouring councils and housing associations, and the redeployment of frontline staff from elsewhere in the council, has dealt with the waste that accumulated. We have seen 26,000 tonnes of waste cleared. As I said, now that trucks are leaving the depot as usual in most cases, more tonnes per day are being collected than during regular times, so the council is on top of this. There is no need to bring in additional agency staff in the way that the hon. Gentleman says.
Sir Julian Lewis (New Forest East) (Con)
Given that the Minister no doubt sincerely believes that the offer on the table is a good one, why does he think the unions are not accepting it?
Jim McMahon
It is clear from the negotiations that there are a number of moving parts. I should declare that we are not replicating those negotiations in this Chamber; they should be between the employer, the employees and the trade unions, and we should not try to circumvent that here. Our belief is that the agreement strikes the right balance between giving support to the workers affected—those in the WRCO roles—and not undermining the equal pay work that has been done. For far too long, we have seen women being underpaid for the work that they do.
Dr Andrew Murrison (South West Wiltshire) (Con)
The Minister failed to answer the question from my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on whether troops should be used to clear up the mess. Will he do so now? The Defence Secretary, who is sitting next to the Minister, will know very well that a trained soldier’s pay starts at around £25,000. If troops are used, will they receive arduous duty payments under the arrangements for military aid to civil authorities?
Jim McMahon
I think I have covered this at least a couple of times. As I said, we are grateful to our colleagues in the Ministry of Defence for the logistical support they have provided. We had three members of staff on logistical planning; they have had a significant impact, and we and the council are grateful for that. There is no requirement for troops to be deployed on the streets to collect waste, because the council is getting on top of it. We do not take that for granted, and we do not want any disruption to that, but to be clear, the military are not needed on the streets of Birmingham. The council have the situation in hand, and workers are doing that work today.
Lincoln Jopp (Spelthorne) (Con)
I have a genuine question for the Minister. I am a little bit confused about what these three supermen and women from the MOD or the military have done. One of the principles of mutual aid and military aid to a civil authority is that the people being helped must not have the capacity themselves, and it must be unreasonable to expect them to grow that capacity in a timely manner. What have those people done that Birmingham city council could not do itself?
Jim McMahon
I am usually a bit suspicious when somebody starts their question with “This is a genuine question”, but that was actually a proper question. Members could learn from it. [Interruption.] Calm down. On the added value that the MOD was able to provide, every council has rotas for getting bins collected from a given place. Birmingham had mutual aid offers from other councils, and it had to work out how best to use quite different offers of support—how to deploy trucks and available workers across the city, working in a different way. The logistical workers from the MOD supported the creation of new collection rounds to clear the accumulated waste.
David Reed (Exmouth and Exeter East) (Con)
Could the Minister—or the Pied Piper, as he is quickly becoming known—clear up the record, please? In his opening statement, he said that the military offered its support to clear up this mess. Did it offer, or was it ordered by his Department to provide support, because his Government cannot stand up to the unions?
Jim McMahon
I have already covered the value that the MOD has provided, and of course, we work in partnership. The offer of support was made to the council, which received that offer gratefully. However, the MOD, whose logistical planners have been on the ground in Birmingham, has been clear that the council is at a point at which it does not need its support, because it has the collection rounds in place. I hope the hon. Gentleman welcomes that.
Lewis Cocking (Broxbourne) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests. Just eight weeks ago, during a Select Committee evidence session, the Minister told me that
“there is a lot of good work taking place in Birmingham”.
The Government want to create super-councils, covering half a million people and reaching over vast areas to manage bin collections and other vital services, against the wishes of my constituents. We have seen the result in Birmingham. Does the Minister believe that tons of rubbish on the streets is the model that the rest of the country should follow?
Jim McMahon
In a way, that question shows a misunderstanding of why Birmingham is in the situation it is in. It makes no more sense to say that Birmingham’s problems are because of its size and scale than it would to say, “Look at the debt liabilities built up by some of the smallest councils in the country, which have borrowed many hundreds or thousands of times their revenue.” In a way, these problems are down to long-term issues. Some of this situation is due to the foundational funding that Birmingham city council has been given, but Birmingham is getting its house in order. It is not an easy process, and that council would say itself that it has a way to go. When it comes to resolving historical equal pay liabilities, and issues with the Oracle IT system, the council faces a significant financial liability. It is making progress on modernising its workforce and on the future operating model, but it has some way to go.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his answers to some very difficult questions. He will understand, of course, the absolute necessity of military intervention in civil life in Northern Ireland over a great many years. While it is never an easy option, does the Minister agree that if it is the only option to ensure that disease does not spread through the city—if a pay deal cannot be reached—action has to be taken, before the ill and the vulnerable pay the price of this stand-off?
Jim McMahon
As things stand, a normal service has returned to most streets at most times. The accumulated waste that was building up—which was not acceptable at all—has been removed. Some 26,000 tonnes has been removed; in most places at most times, the collection of bins is taking place as normal, and over 100 trucks a day are leaving the depots as usual. We hope that we do not return to the scenes that the hon. Gentleman has described, for the reasons that he expressed. That is not acceptable from a public health point of view, and has consequences.
Oral Answers to Questions
Jim McMahon Excerpts(1 month ago)
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David Davis (Goole and Pocklington) (Con)
The Minister for Local Government and English Devolution (Jim McMahon)
The Government recognise the impact that spending on special educational needs and disabilities is having on council finances. A £1 billion increase to SEND and alternative provision was announced for 2025-26 in the autumn statement. The Government intend to set out plans for reforming the SEND system in further detail this year. That will include details on how the Government will support local authorities to deal with their historical and accruing dedicated schools grant deficits.
David Davis
Next March, when local authorities can no longer exclude the high needs elements from their balance sheets, half of them will go bankrupt as it now stands. For the East Riding, it is estimated that this year’s education budget is £17 million in deficit. That is largely because of increased high needs spending on pupils with special education needs. Can the Minister give me an undertaking that we will not next year find ourselves either crushing the needs of special needs children or those of other needs in society?
Jim McMahon
First, we need to repair the system of SEND provision and deal with its impact on local authorities. The system is not sustainable in its current form, and we must reform it from the ground upwards. Secondly, deficits have been accruing and are still accruing, and that is a big issue. We certainly do not intend councils to be the victims of a system over which they have had no control, and we will work with them in our endeavour to prevent that.
Jen Craft (Thurrock) (Lab)
As a SEND parent, my view of my child’s needs is holistic: I do not believe that they simply stop where the responsibilities of a local authority lie. What steps is the Minister taking to ensure that our SEND policy reflects such needs and the responsibilities of, for instance, the Department of Health and Social Care, the Treasury and the Department for Education, as well as local authorities?
Jim McMahon
As my hon. Friend says, this issue requires a whole-of-Government approach. When Governments work in silos, it is those who need support the most who fall through the gaps in the end. This Government do work across Departments, including our own and the Department for Education, to ensure that we have a single plan. Ultimately, of course, we have to deal with the financial impact on councils, but it is the young people going through the system who really matter.
David Davis (Goole and Pocklington) (Con)
Wendy Morton (Aldridge-Brownhills) (Con)
The Minister for Local Government and English Devolution (Jim McMahon)
All of us understand how difficult things are in Birmingham, and it is the Government’s job to support Birmingham to recover and get services back to normal. There are three strands: regularising the negotiations with the trade unions to find a long-term solution, dealing with routine collections and getting more trucks out of the depot, and dealing with the clean-up of waste that has accumulated on the streets. We are supporting the council in doing that. On the question of mutual aid, any mutual aid that is provided by local authorities will be reimbursed.
Rachel Hopkins (Luton South and South Bedfordshire) (Lab)
Jim McMahon
I pay tribute to local leaders in Essex and other places for the leadership they have shown to make sure that there is sustainable and accountable local government at the end of the devolution and reorganisation process. The right hon. Member has our absolute commitment that we will work through those issues with local leaders. As for the election question, elections have been postponed for a year, and it is our intention that routine elections will take place as planned.
Yasmin Qureshi (Bolton South and Walkden) (Lab)
Ayoub Khan (Birmingham Perry Barr) (Ind)
This morning, firefighters in Birmingham made it plain that they will stand in solidarity with the bin strikers in Birmingham and not collect the rubbish. We know that there are only 17 workers, which means this is a drop in the ocean financially. Given that the Government have said they will do all they can to bring the strike to an end, will the Deputy Prime Minister confirm that they will force the council to make the payment, and that they will deploy the Army to assist the local charities and organisations that are helping to clear up and need extra support?
Jim McMahon
The hon. Gentleman does very well to go from zero to 100 pretty quickly on the issue, but let us step back from the immediacy of it. Clearly, we want all parties to be in the room negotiating the underlying pay, terms and conditions dispute that is at play. To be absolutely clear, there has to be a red line. This cannot stray into potentially compromising the equal pay settlement that has been agreed, so that that all begins to unravel. Bear in mind that that has already cost the local authority £1 billion. We support them, and we want people in the room. The deal has to be a sustainable one that will hold.
Tees Valley Combined Authority: Best Value Notice
Jim McMahon Excerpts(1 month ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
Taxpayers expect and deserve well-functioning local and combined authorities which provide essential statutory services for local residents. This Government’s manifesto committed to rebuilding local government and handing control back to local leaders. To achieve this, we must get the basics right and ensure local and regional government is fit, legal and decent. Government will continue to work directly with a small number of authorities in difficulty as a responsible steward for the sector, and this should be done in a way that is based on genuine partnership to secure improvements.
Today, I would like to update the House on the steps we are taking in relation to the Tees Valley combined authority. The people of Tees Valley must have confidence that every penny of their money is being spent appropriately and today’s announcement is about ensuring that is the case.
In May 2023, the previous Government commissioned an independent review to consider the specific allegations made and Tees Valley combined authority’s oversight of the South Tees Development Corporation and Teesworks joint venture. This review was published in January 2024.
In February 2024, the Tees Valley combined authority Mayor, Lord Houchen, responded to this review. His response was published on gov.uk. The then Secretary of State, the right hon. Michael Gove, requested a further update on progress in six months’ time and my Department received this update in September 2024. The authority’s auditors then published reports covering financial year 2023-24, which identified significant weaknesses in value for money arrangements, meaning auditors declined to sign off accounts.
After having carefully considered the relevant evidence, my Department has today issued the authority with a best value notice.
This notice is not a statutory intervention. It is a formal notification that the Department has concerns regarding the authority and requests that the authority engages with the Department to provide assurance of improvement. The Department expects authorities that have been issued with a best value notice to continue leading their own improvement. I note that the Tees Valley combined authority is already supported by an independent assurance panel established with the Local Government Association. I encourage the authority to make full use of the panel’s expertise and guidance and to strengthen its role in day-to-day operations, and will be looking to the panel for updates on the authority’s progress.
We are committed to removing barriers to growth in the region, as well as supporting the development of new industries and creating new jobs in the region. That is why this Government have confirmed the allocation of up to £21.7 billion of funding over 25 years for net zero clusters in Teesside and Merseyside, and why we are finalising development of the Tees Valley investment zone. This notice today is about rebuilding trust in the combined authority after a long period of uncertainty, so that it can continue its journey towards deeper devolution.
Today’s announcement offers the opportunity to provide the foundations for future investment into the area oriented towards the public good, underpinned by good governance and careful management of taxpayers’ money. I recognise that today’s decision will have implications for the authority’s progress towards enhanced mayoral strategic authority status, and the granting of an integrated settlement. We are committed to working closely with the authority to enable swift progression once improvements have been made.
The independent review also made recommendations for Government. I am today publishing non-statutory guidance to address a key recommendation. This guidance clarifies the governance, oversight and legislation of mayoral development corporations. It is relevant to all mayoral combined authorities and mayoral combined county authorities in England. In due course, I will publish an updated version of this guidance to address the relationship between stranded liabilities and mayoral development corporations.
The Government remain of the view that, while the independent Tees Valley review was thorough within its terms of reference, it was by nature not designed to answer all the questions raised, but instead to focus on the governance and finance elements of the best value regime. The residents of Tees Valley cannot afford to live under a shadow of uncertainty for any longer, and investment in the region demands full confidence from both the public and the private sector. I hope that this process will offer the opportunity for a reset, providing the foundations for future investment into the area oriented towards the public good, underpinned by good governance, transparency, and accountability. Authorities must demonstrate robust financial management, effective decision making, and meaningful engagement with communities to uphold best value principles.
The focus now must be to ensure that the improvements needed are not only secured but also sustained, embedding a culture of continuous improvement and responsible stewardship in line with statutory best value obligations.
I will deposit in the House Library copies of the documents I have referred to, which are also being published on gov.uk today.
I will keep the House updated if any further steps are taken.
[HCWS576]
Non-Domestic Rating (Multipliers and Private Schools) Bill
Jim McMahon ExcerptsMonday 31st March 2025
(1 month, 1 week ago)
Commons ChamberRead Full debate Non-Domestic Rating (Multipliers and Private Schools) Act 2024-26 View all Non-Domestic Rating (Multipliers and Private Schools) Act 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Message as at 31 March 2025 - (31 Mar 2025)
The Minister for Local Government and English Devolution (Jim McMahon)
I beg to move, That this House disagrees with Lords amendment 1B.
Madam Deputy Speaker (Caroline Nokes)
With this it will be convenient to discuss:
Lords amendment 2B, and Government motion to disagree.
Lords amendment 7B, and Government motion to disagree.
Lords amendment 8B, and Government motion to disagree.
Lords amendment 13B, and Government motion to disagree.
Lords amendments 15B to 15E, and Government motion to disagree to the words restored to the Bill by the Lords non-insistence on their amendment 15.
Jim McMahon
I am grateful for the opportunity to consider the Lords amendments tabled in lieu of those to which this House disagreed. I reiterate my thanks to Members of both Houses for their continued diligence in the scrutiny of these measures.
The Bill makes provision to enable the introduction of permanent lower tax rates for retail, hospitality and leisure businesses from April 2026, ending the uncertainty of the temporary RHL relief. The RHL relief stopgap measure creates uncertainty for businesses, as well as a significant fiscal pressure on the Government. This Government are committed to addressing that in the Bill.
The Government face the significant challenge that we must balance the books, so we cannot and should not make tax cuts without ensuring that those tax cuts are funded. The Bill therefore makes provision to enable the introduction of a higher multiplier for all properties with a rateable value at or above £500,000, ensuring that the permanent tax cut from RHL properties is sustainably funded from within the business rates system.
The Bill will also help to deliver another of the missions set out in the Government’s manifesto: breaking down barriers to opportunity. It will remove eligibility for charitable rate relief from private schools that are charities in England. As I have said before in this House, the Government believe in parental choice but are also determined to fulfil the aspiration of every parent to get the best education for their child. To eliminate the barriers to opportunity, we need to concentrate on the broader picture towards the state sector, where—let us remember—over 90% of children are educated. The revenue raised through the removal of charitable relief will help to deliver our commitments to education and young people and will help us to meet our overarching mission of breaking down barriers to opportunity for all.
Lords amendments 1B and 7B seek to allow the Treasury to exclude healthcare hereditaments from the higher multiplier through regulations. Lords amendments 2B and 8B seek to allow the Treasury to exclude anchor stores from the higher multiplier through regulations. The amendments are unnecessary, because the powers that they seek already exist in the Bill. Let me be clear: the powers in the Bill will already allow the Government, should they so choose, to exclude certain properties from the higher multiplier. This is not the intention that I have set out; the Government’s intention is that the higher multiplier will apply to all properties at or above the £500,000 threshold to ensure that local multipliers can be adequately funded. I urge the House to reject the amendments, because they are not required and they duplicate powers that already exist in the Bill.
Lords amendment 13B, tabled by Lord Thurlow, would require the Government to
“undertake a review of how the provisions in this Act may affect businesses whose rateable value is close to £500,000.”
The amendment would require the review to be laid before Parliament within six months of the day on which the Bill is passed. It also specifies that the review
“must consider the merits of a separate Use Class and associated multiplier for retail services provided by fulfilment warehouses that do not have a material presence on local high streets, to apply in England.”
We have previously considered two similar Lords amendments, and our position has not changed. The amendment is unnecessary. The “Transforming Business Rates” work that is under way recognises the cliff edge in the business rates system and recognises that it may act as a disincentive to expanding. I reiterate the assurance that I have previously provided to the House: the Government are already looking at this precise issue.
The second part of Lords amendment 13B would require the Government to undertake a review examining the merits of a separate use class in business rates and an associated multiplier for warehouses that cater for retailers without a material presence on the high street. As has been set out, the Government are already exploring that objective through the projects that have been mentioned. The “Digitalising Business Rates” project will allow us to match property-level data with the business-level data held by HM Revenue and Customs. This will improve the way in which we target business rates. The Government therefore remain of the view that the amendment is not required. I urge hon. Members to disagree to it.
The Government are fully committed to transforming the business rates system. This is simply the first step in a wider programme of change in a system that is long overdue for reform. As the Chancellor set out in the spring statement last week, the Government will publish an interim report setting a clear direction of travel for reform, with further policy details to follow at the autumn Budget. Reforms to the business rates system will be phased in over the Parliament.
Finally, amendments 15B to 15E seek to move the measure to remove the charitable rate relief from private schools from one that is being made by Parliament through this Bill to one that the Secretary of State would make through regulations, subject to the affirmative resolution procedure for that statutory instrument. The Government are committed to delivering on our manifesto commitments, and part of that is removing the charitable rate relief from private schools to raise revenue to help deliver on our commitments to young people and education, including the in state sector where, as I said, most children are educated. The Government’s view is that this is a matter for Parliament to decide, which is why we have invited Parliament to do so through this Bill. Therefore, the amendments are unnecessary, the Government cannot accept them, and we ask the House to disagree to them.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Jim Shannon (Strangford) (DUP)
I thank the Government for bringing the Bill forward, but I have to put on record some of my concerns—the Minister will not be surprised. He knows that it is never meant in an aggressive way; I put things forward in this way because it is important that my constituents have a chance to express themselves through me in this Chamber.
First, I echo the concerns of the shadow Minister and the Liberal Democrats spokesperson in relation to hospitals and medical and dental schools. I have some concern over how that will trickle down, as it will inevitably, and put pressure on sectors where it does not need to be. The job of those three areas is to ensure that our hospitals can deliver the care and our medical and dental schools can produce the students with the expertise and knowledge to be the next generation of those who look after us.
My major concern, however, is about private schools. I know the point has been echoed many times, but I cannot let this occasion go without making my remarks, on which I have sought the direction of Madam Deputy Speaker and other parties. Members will be aware of the issue with private schools, and I have spoken about it on numerous times to put forward the argument for the faith schools in my constituency. Parents scrimp and save to ensure that their children can go to those schools and have the standard of education that they wish for them, and they have asked me to put that on record. The reason I persist in raising the issue is that I truly believe that some people of faith will be further disadvantaged when the Bill goes through. I know that that is not the Government’s intention, but it will be the reality, and for that reason I must put it on record.
Although the rating provisions will not apply in Northern Ireland per se, the disadvantage to our sector remains in the removal of the tax considerations, which will affect schools in Northern Ireland. That is where the issue is. For the mainland, the effect is quite clear, but schools in Northern Ireland will be affected as well. I wish to be clear that I oppose these provisions on behalf of faith-based schools on the mainland as well, because parents of children at those schools want the same as those who spoke to me.
I am a very proud member of the all-party parliamentary group for international freedom of religion or belief, and I believe that that extends to parents’ freedom to educate their child with a view to how their faith is worked into that education. Lords amendment 15 has been referred to by the shadow Minister and by the hon. Member for Mid Dorset and North Poole (Vikki Slade). For many parents, confidence that their faith will not be dismantled in the classroom is worth the financial burden of paying into their child’s education, but that is being denied by this legislation. I believe that they all deserve the opportunity to educate their child in a way that they wish, for which they will probably pay handsomely, but these proposals will adversely affect parents’ freedom to educate their child in their religious belief.
The option to home-school is one that parents may not have considered previously, yet may now feel is the only financial option available for them. Those parents may not feel qualified or equipped to deal with the skills that are vital to home-schooling, yet believe there to be no option as they simply cannot afford to pay the uplifted fees. That is the unfair burden that falls on the shoulders of those parents.
I firmly believe that the Government disagree with almost every Lords amendment because the Lords amendments interfere with the public revenue and affect the levy and the application of local revenues. The Commons does not offer any further reason, trusting that this reason may be deemed sufficient. Basically that means, “We need the money.” I have been a Member of this House for almost 15 years and an elected representative for some 40 years as a councillor and a member of the Assembly, and never, ever have I believed that money is the bottom line, and I do not believe that many right hon. and hon. Members believe that. We cannot take faith-based education out of the hands of a certain class of people to punish those high-class schools with swimming pools. Let me assure the House that Bangor Independent Christian school, with its Sunbeams nursery schools, has no pool. Regent House prep in my constituency has no swimming pool either. There are small primary schools that will have difficulty operating when these regulations come into force, and that is simply not right.
I know that the strength of the Labour Government means that this Bill will pass, but I am urging individual MPs across the House to consider who will be punished and to urge the Government to review this tax raid on education, even at this late hour. We believe in the right to live one’s faith, and we cannot tax that right out of reach. That is where this Bill has gone wrong, and has divorced itself from the reality of the people that I represent.
Jim McMahon
I think I addressed the majority of the points in my opening speech that have been raised subsequently, but I thank Members for their contributions. We have heard the Opposition’s concern that the multipliers do not deliver on the stated intention of the policy as announced in the Budget. We clearly do not agree with that position. At the Budget, the Government announced their intention to introduce two lower multipliers for qualifying retail, hospitality and leisure properties, to end the uncertainty of the annual retail, hospitality and leisure relief. Also, as I set out in my opening speech, the relief was a temporary stopgap measure. Of course, it has been extended year on year, but it does not provide the certainty that businesses require. It has created a cliff edge.
During our last session—I cannot remember when it was; it feels like it was yesterday—the hon. Member for Thirsk and Malton (Kevin Hollinrake) seemed to acknowledge that the cliff edge that was built in the previous system was providing uncertainty to businesses and their ability to plan ahead. He must surely welcome the fact that this new lower multiplier—this permanent relief—gives all businesses, whether they are retail, hospitality or leisure, the long-term security that they have been asking for and, importantly, in a way that is sustainable and self-financing through the business rates system.
Through the Bill, the Government are taking steps to address all the issues that have been outlined. The chosen approach is both appropriate and prudent, and the challenging fiscal environment that the Government face requires it. Any tax cut must be appropriately funded, under our commitment to sound financial management, so the Government intend to introduce a higher multiplier for all properties with a rateable value of £500,000 and above. It is important to say this to settle some of the arguments: that will affect less than 1% of properties in England. Less than 1% will pay more, but that will fund the lower multiplier, as we all recognise. That will help our town centres and our high streets, and it is what we need to do. This approach delivers on the policy set out in the Budget, and on our manifesto commitment to transform the business rates system to make it fairer and fit for the 21st century, and to protect the high street.
Kevin Hollinrake
The Minister says that the solution that he has alighted on meets his manifesto commitment, but his manifesto says,
“This new system will level the playing field between the high street and online giants”.
That is not what the provision does—not exclusively. He knows that it levies extra taxes, extra business rates, on high street stores, large department stores, supermarkets, football stadiums and many others. They are not online giants.
Jim McMahon
The rating system adequately reflects the scale of properties. Less than 1% of properties in the business rates system will use the higher multiplier. That will fund the tax break for those on the high street that will use the lower multipliers. In the evidence session —the hon. Gentleman was there—we heard retailers say, “Of course, that will have an impact on our distribution centres, but we have so many stores that are below the threshold.” That allows national retailers with multiple locations to benefit; in the round, they find themselves better off as a result of this policy. As for rebalancing the situation for online retailers and those on our high streets, that is exactly what this measure does. Big distribution centres will pay for that relief.
I once again thank hon. Members for their contributions, but for the reasons set out, I respectfully ask this House to disagree with the amendments before us.
Question put, That this House disagrees with Lords amendment 1B.
The House proceeded to a Division.
Madam Deputy Speaker (Caroline Nokes)
Order. As the escalators in Portcullis House are still not working, I shall allow an additional two minutes for the Division.
Birmingham City Council
Jim McMahon Excerpts(1 month, 1 week ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
With permission, Madam Deputy Speaker, I would like to update the House on the statutory intervention at Birmingham city council and on the issues affecting the waste service.
This Government were elected on a manifesto that pledged to fix the foundations of local government. The public rightly expect and deserve well-functioning local councils that provide the essential statutory services that residents rely on. Local councils must be fit, legal and decent. Commissioners have been working with Birmingham city council for the past 18 months to support it in its recovery, and today I am publishing their latest report into the progress on that journey. The report lands at a point of acute difficulty for residents in Birmingham, as the ongoing dispute in the waste service is resulting in rubbish piling up in the streets. I will therefore take this opportunity to update the House on the status of that dispute.
To address the report first, the council has taken important initial steps forward on its improvement journey, and is working constructively with commissioners. It has made significant progress on addressing historical equal pay issues and fixing the foundations of governance. The leader, Councillor Cotton, and his group are taking the difficult decisions to get the council back on track, and the commissioners have recognised his calm leadership through stormy waters. The new managing director, Joanne Roney CBE, has brought a steady hand, and is beginning to make permanent senior appointments that will contribute to much-needed stabilisation. The council has also achieved a breakthrough by reaching an agreement to settle the outstanding claims and end the ongoing equal pay saga. It is also set to re-implement a strategy for the Oracle IT system.
Those improvements are encouraging, but challenges remain. In the short term, commissioner oversight and close supervision will still be required to maintain momentum. There is a difficult road ahead on key aspects of the best value regime—on governance and culture, financial management and service delivery—because substantial risks threaten the journey to reform and recovery. As Members will know, there is a live industrial action in waste services, involving one of the three recognised trade unions in that area. The Government will support the leader and his team in Birmingham, directly and through the commissioners, to move the council on from these historical issues. That support includes an increase in core spending power for 2025-26 of up to 9.8%, or £131 million. That figure includes £39.3 million through the new one-off recovery grant, which illustrates this Government’s commitment to correcting the unfairness in the funding system. We have also put in place an in-principle agreement for exceptional financial support totalling £1.24 billion.
Turning to the waste dispute, councils deliver over 800 vital services that make a huge difference to millions of people across the country. However, it is accepted that for many, the most visible and universal service is the collection and disposal of household waste. Members across the House will know that the current industrial action in the city is causing misery and disruption to local people, and I know that hon. Members whose constituents are affected will be acutely aware of that disruption.
From the outset, I want to be clear that the statutory intervention is led by commissioners, and Ministers cannot legally intervene in this industrial action. However, I have been in regular contact with the leadership of the council throughout this, as they have sought to find a resolution in which the reforms needed to build a sustainable council are still undertaken, and the waste collection service returns to functioning normally, in the way that Members would expect. This situation is causing public health risks to the city’s most vulnerable and deprived residents. As a result, Birmingham has today declared a major incident, so that it can use the mechanisms that it needs to better manage the impact on local residents. I support that decision, and I will back local leaders in bringing the situation under control in the weeks to come.
Well-established arrangements are in place to enable local areas to escalate issues when they need support, and the Government are monitoring the situation closely. This is a local issue, and it is right that the key public sector partners in Birmingham lead on it. If leaders in Birmingham feel that tackling these issues would require resources beyond those available to them, and request national support, we of course stand ready to respond to any such request. This Government will always back local leaders and give them the support that they need, not swoop in to criticise or take over from Whitehall. We will not hesitate to give support in any way that Birmingham leaders need. As Parliament would expect, a meeting will take place with the leadership of the council, the commissioners and other key local partners to ensure that we are doing everything we can to support and protect public health.
It is in the interests of all parties and, most importantly, for the benefit of Birmingham’s residents that this industrial action is brought to a close in a meaningful and sustainable way as soon as possible. We encourage all parties to redouble their efforts to get around the table and find a resolution. Any deal to end industrial action must maintain value for money and ensure fit-for-purpose waste collection services, without creating or storing up liabilities for the future. All parties recognise that Birmingham’s waste service has been in urgent need of modernisation and transformation for many years, so any deal reached must not repeat the mistakes of the past.
Practices in the waste service have been the source of one of the largest equal pay crises in modern UK history, resulting in costs of over £1 billion to the residents of Birmingham. This situation simply cannot continue. I support the council on its journey to creating the sustainable, fair and reliable waste service that residents in Birmingham deserve. We will support the council in resolving its historic issues and establishing the leadership, governance and culture that will drive good-quality public services for the people of that city, so that it can take its rightful place with confidence as one of our great UK cities.
As the council moves to the next stage of intervention, I will continue to work with the council, commissioners and the wider local government sector to understand how we can best ensure that residents get what they need from their local council. I will monitor progress, as I have done since the general election, to ensure that continuous improvement led by the council can be secured. As I am sure the whole House would expect, the commissioner arrangements will need to remain in place while the situation in Birmingham is so fragile. The commissioners have a vital role to play in supporting Birmingham’s transformation, working hand in glove with local leaders.
The Government remain committed to working in genuine partnership with the city and its council, and I continue to encourage the council to strengthen its partnerships with regional stakeholders, including Mayor Parker in the West Midlands combined authority, to support economic growth and financial sustainability. We are keen to promote growth and regeneration opportunities for Birmingham, and we are confident that as the council continues to work to fix the basics, while making progress against the milestones, local stakeholders will be encouraged to work in partnership with the council to deliver a clear vision for the future.
I look forward to continuing dialogue with commissioners, the council and regional partnerships, including Mayor Parker, on opportunities for growth in the region. A partnership approach with a clear vision will increase Birmingham’s capacity to achieve sustainable growth. The people of Birmingham deserve a well-run, accountable and financially stable council with good public services, not least waste collection services. I am encouraged by the council’s leadership and commitment to the same, and I look forward to the council beginning to demonstrate more ownership of its recovery, and to seeing evidence that it can deliver the lasting improvements that are required. I will deposit in the House Library copies of the commissioners’ report, which is being published today on gov.uk.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Kevin Hollinrake (Thirsk and Malton) (Con)
I thank the Minister for advance sight of the statement. I am sure that the fact that both my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and I tabled an urgent question on this issue played a part in the Minister coming to the House today. He has said nothing on this matter for the 20 days in which it has been a live issue. It is shameful—a national embarrassment—that one of our nation’s great cities, our second city, finds itself in such a bleak situation.
As the Minister admits, the problem is of the council’s own making. It is a result of the flawed deal with Unite back in 2017, which led to legal action over equal pay, but it is the people who pay the price. We have had mountains of rubbish blighting the streets of Birmingham for more than 20 days, and there is no end in sight to the dispute with Labour’s union paymasters, Unite. Almost every area is plagued by overflowing bins, rats the size of cats, and opportunistic fly-tippers exploiting the chaos to turn open spaces into dumping grounds. That is the reality of Labour in local government.
From Edgbaston to Sutton Coldfield, from Yardley to Erdington, and from Balsall Heath to Sparkhill, the piles of waste grow even higher. This is a public health emergency, as the hon. Member for Birmingham Edgbaston (Preet Kaur Gill) has conceded. Even the Labour Mayor of the West Midlands has said that he is “fed up” with waste piling up and the streets being filthy. That is why we call for a Cobra-led response. This issue demands a co-ordinated effort across local and national Government, harnessing the expertise of public health officials, civil contingencies professionals and emergency services.
We call on the Government to cut councillor allowances for the cabinet members who got Birmingham into this mess, and we urge the Government to appoint binmen from the private sector to clear up Labour’s mess. Where are Labour’s MPs today? I can only see one on the Government Benches. [Interruption.] Okay, there are two here, out of 10. While they have been campaigning for an airport in Kashmir, we are proposing workable solutions.
The Minister talks about the calm leadership of Councillor Cotton. What local residents need is action, not buzzwords, both from the local leadership and from central Government. He says that Ministers cannot legally intervene in this industrial action. Is he honestly saying that he has no influence with the union involved, Unite, which is complicitly holding the city hostage, and which contributed £10,000 to the Deputy Prime Minister’s election war chest? Surely she is now duty-bound to pick up the phone and speak truth to the real power behind the Labour throne, the unions.
Incredibly, Unite is calling on central Government not to live within its means, but to make hundreds of millions of pounds available to the council. Is that something that the Minister is considering? He talks about an increase of 9.8%, or £131 million, in the council’s core spending power for the forthcoming year. Will he confirm that a significant part of that is being raised by means of a council tax increase of 7.8%, and that that is a clear breach of the Prime Minister’s pledge to freeze council tax this year?
I pay particular tribute to Councillor Bobby Alden and the Birmingham Conservatives who, alongside my hon. Friend the Member for Sutton Coalfield, have been doggedly holding the council’s incompetent leadership to account. They have clear solutions to this crisis. Now that Birmingham has today declared a major incident, leading to the availability of new mechanisms, can the Minister confirm that he will meet them to ensure that those mechanisms are considered?
I find it extraordinary that the Minister should say that Birmingham city council has not yet requested national support. Will he not insist that it do so immediately? He also said that he would meet local leaders and commissioners. Given that this crisis has been ongoing for 20 days and counting, why has he not already met those local leaders, and when will he do so? Will it be this very week?
Jim McMahon
Well, well. No one listening to that response would think that the Conservative Government had been in government for 14 years, and were in office when Birmingham had to come to them for financial support. But Birmingham was not alone, was it? Councils were falling like dominoes because of the last Government’s chronic underfunding. The Conservatives talk about Kashmir; they left a cash crisis that affected every council. Every single council, whether it was Labour, Conservative or Liberal Democrat, was let down by the Conservative Government. The Conservatives cannot even look their own councils in the eye. When it comes to reorganisation, local leaders who are doing what is needed for their area and showing local leadership have been being undermined by the national leadership. They are lions led by donkeys.
Beyond the party political nonsense that has been deployed, surely we can all agree that we care about the people of Birmingham and want this vital public service restored. Surely we all agree that given the last Government’s intervention in Birmingham, the journey of improvement is fragile. Yes, improvements have been made, but we have to maintain our course. The Conservatives must also accept that one of the biggest barriers to settling the council and giving it long-term stability was the storing up of equal pay liabilities. Resolving this issue is critical, not just for the council but for the people of Birmingham.
I can assure the hon. Member for Thirsk and Malton (Kevin Hollinrake) that regular conversations have been taking place. That includes a meeting with the council leader a couple of weeks ago, and there will be a further meeting this week. We have said that we will do what is needed to help the council achieve what it needs to achieve, and to get the service back on track. I am sure that the hon. Gentleman will agree that that is the right approach, with local leaders showing local leadership and national Government providing the support that is needed.
Bizarrely, the hon. Gentleman referred to council tax increases. The council tax increase in Birmingham last year, under the last Government, was higher than this year’s increase. Why? Because this Government have a clear eye on looking after taxpayers and ensuring that any increases are contained. How did we do that? We did not do what the last Government would have done. We did not say, “Just go to the wall and see what happens.” It was this Government who provided nearly £40 million of new money through the recovery grant for Birmingham, to ensure that it did not have to pass that increase on to local taxpayers. That is genuine partnership, with national Government and local government working hand in hand. Is it not time that the previous Government accepted their failings over 14 years in office and accepted that the foundations of local government were left weaker, not stronger, when they left office? Will they now start putting the interests of the people of this country ahead of political interests?
Paulette Hamilton (Birmingham Erdington) (Lab)
This bin dispute is causing chaos in the city, including in Birmingham Erdington. What discussions have the Government had with Birmingham city council regarding not just the bin collections, but the impact on public health and the environment? It is so important that we look at the health and safety of local residents in Birmingham.
Jim McMahon
That is the crux of where we are: because the bin dispute has been going on for so long, the scale of uncollected rubbish being left in the streets is now posing public health concerns, which is why the council has declared a major incident today. It is showing local leadership, it recognises the public health implications, and it is working with local public sector providers. As I have already said, I will make sure that the Government stand absolutely ready to work with the council and to provide any support that it needs, as part of a genuine partnership.
Vikki Slade (Mid Dorset and North Poole) (LD)
I apologise, Madam Deputy Speaker—I ran all the way from the top floor of Derby Gate, but I was not fast enough. I refer the House to my entry in the Register of Members’ Financial Interests: I am an elected member of Bournemouth, Christchurch and Poole council.
The people of Birmingham have a right to receive decent services, and it is critical that the ongoing dispute is resolved as quickly as possible. Like the hon. Member for Birmingham Erdington (Paulette Hamilton), we are concerned about the impact on public health and the environment, and urge the Government to confirm that when waste collection resumes, it will be safely disposed of and recycled where possible, and not just given to the cheapest bidder.
Fundamentally, the Conservative Government slashed funding to local authorities year on year, forcing councils to do more with less and plunging so many, of all political stripes, into financial crisis. However, we are disappointed that the Government have not yet addressed some of the financial crises, particularly around confirmation of the special educational needs override, which I know councils across the nation are really worried about, and which is making it more difficult for them to make decisions about their future plans.
We welcome the multi-year settlements, which I am sure the Minister will refer to, but we remain concerned about how effective they will be. Two recent examples give us cause for concern: the roads funding, which appears to give local authorities more money, actually cuts England’s road repair budget by 5%; and the employer’s national insurance change, which promised to cover councils’ costs for direct staffing in full, did not do so in some cases, including for Bournemouth, Christchurch and Poole council. All that is underpinned by a broken council tax system that is regressive. In some areas, the council tax base is totally inadequate to provide for the growing list of services, and the Lib Dems want to see a radical overhaul.
Birmingham should serve as a lesson for the Government, because this matter is a result of the long-running equal pay crisis. What learning are they taking from the situation in Birmingham, and what extra measures is the Minister introducing to prevent public health and community safety issues?
Jim McMahon
I am pleased to say that we are making sure that we deal with the waste piling up in the streets and that the council gets the support it needs, but the hon. Lady is right to say that there is an interrelationship. This dispute does not sit in isolation; it is part of wider considerations on equal pay, and we have to bear in mind that the cost of meeting the equal pay liability for the people of Birmingham is £1 billion. There can be no steps forward in this dispute that double down on the inherent problems that led to the equal pay crisis that the city has faced. These are sensitive negotiations, but it is important that the council continues to negotiate and that people get around the table to find a way through.
The hon. Lady talks about the multi-year settlement that is being prepared for and the simplification of the funding mechanism, but she also mentions redistribution. Birmingham and councils like it have not found themselves in this situation in a vacuum; it has been partly driven by central Government not distributing money in a fair way to deal with service need and deprivation, and it is very important that we get the money to where that deprivation exists. Even under the current one-year settlement, Birmingham has had a 9.8% increase—in cash, that is £131 million.
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
I welcome the Minister’s statement. The Birmingham bin strike means that many of my constituents have not had their bins collected in weeks, and this week a constituent wrote to me to say that they had been bitten by a rat. I have been raising the public health situation and calling for the council to take emergency measures, so I do welcome the fact that it has declared a critical incident today.
Does the Minister agree with me that it is unacceptable that Unite pickets have been frustrating the council’s contingency plans by blocking depots, and that it is time for Unite to accept the fair deal on the table? Seventeen people cannot hold 1.2 million Birmingham residents to ransom.
Jim McMahon
My hon. Friend is right to say that the vast majority of the workforce of the service have agreed a way forward, by one route or another—whether by taking voluntary redundancy or accepting a new way of working—and that this comes down now to a small number of people who have not accepted that. In the end, that is where the dispute lies. I do agree that a city cannot almost grind to a halt because of such a circumstance in its waste collection service.
I encourage all parties—the local authority as the employer and the trade unions—to get around the table, and focus on the bigger prize here. After almost a decade of uncertainty on equal pay, the council and the trade unions have agreed a position from which they can move forward together. That is a significant moment in which I think all parties should take some pride. Let us not spoil it by the action today that could undermine the equal pay negotiations that have been so successful.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
The Minister really cannot get away with blaming the last Conservative Government for this situation. Labour’s own campaign improvement board said:
“Budget cuts and the size of the City are used as reasons to explain the situation however, this does not hold up to scrutiny”.
My constituents in the Royal town of Sutton Coldfield, which is part of Birmingham if only for local government purposes, are absolutely furious at this latest evidence of paralysis and incompetence under Labour. It follows Labour bankrupting the city, rocketing our council tax, seeking to close our libraries and trying to charge us for parking in our own park. Does the Minister not think that we now need a judge-led inquiry into the cause of the equal pay crisis, Birmingham’s bankruptcy and this dreadful bin strike? Surely the people of Birmingham, Britain’s second city, deserve better from the Labour party.
Jim McMahon
I am afraid that the picture that the right hon. Member paints of increased charges at a local level—whether for car parking or other types of charges, or the council tax going up in a way that some households will find difficult—is the story of English local government for the last decade, and Birmingham does not sit in isolation. In many ways, the size of the local authority—the fact that it is the largest local authority in Europe, not just in this country—goes some way to explaining how a ripple in one council of a much smaller size in Birmingham has a much bigger implication.
The right hon. Member talked about a judge-led process. This situation does not need a judge; it needs judgment. The judgment is that, after so much progress has been made on equal pay, now is the time to resolve the dispute, settle it and allow the workforce to move on with fair pay for men and women in equivalent roles across the local authority. I am sure he agrees with me that that is the way forward.
Laurence Turner (Birmingham Northfield) (Lab)
My residents and constituents deserve better than the current scenes in Birmingham. Bins are not being collected, and the council is losing future revenue because commercial contracts are being cancelled. The reality is that bin services were not good enough even before the strike. When the strike ends—and it will end—what assurance can the Minister give my residents that refuse and health services in Birmingham will be decent and fit for purpose?
May I respond to the comments of the right hon. Member for Sutton Coldfield (Mr Mitchell), whom I respect? He sought to deny a share of the blame for his party, but will the Minister confirm that last year’s 10% council tax increase was signed off in No. 10 and the Treasury at the time and that, under the previous Government, Birmingham lost 40p in the pound, with the sharpest cuts of any unitary authority?
Jim McMahon
My hon. Friend rightly sets out how difficult the operating environment has been for local government and in particular for Birmingham. It was the previous Government who introduced the commissioner process, the previous Government who started the exceptional financial support process, and the previous Government who introduced the 10% council tax increase in Birmingham. When we came into office, we were determined not to let Birmingham stand by itself and that we had a role to play. The recovery grant was our contribution to that. The benefit for local people is that we are now able to manage the impact on council tax payers at a local level in a way that, frankly, the previous Government did not seem to care too much for.
How we move on from this point is what I think people in Birmingham want to know. How can we clear up the mess that has been left on the streets? How can we restore a waste collection service that delivers for the people of that great city? How can we have an equal pay agreement that really holds, and is not unpicked by a short-term agreement just on the current crisis? As I said, I think the council has done a good job in navigating very choppy waters, but it is not at the other end of them yet. The improvement journey for Birmingham will take some time. It requires a clear eye on the end that everyone is trying to work towards.
Wendy Morton (Aldridge-Brownhills) (Con)
When the Minister describes this as a local matter, it is clear to me that his Government are washing their hands of the problem. That is not good enough. The residents of Aldridge-Brownhills, which is on the edge of Birmingham, see and hear what is going on and we do not want the problem coming over to us—we do not want the squeaky blinders in Aldridge-Brownhills. What we do want is the Minister to get this problem sorted out and get those bins emptied for residents. It is quite simple.
Jim McMahon
I said that this is a partnership. Of course, Birmingham city council, as the employer in this trade union dispute, has to negotiate with the trade unions and the workforce to get those services back. That is a statement of fact, not an opinion. The question is then: what can we do, as a national Government, to support local government to achieve that? We have maintained support. The commissioners, appointed by the previous Government, are in place. We have provided additional financial support—not just to Birmingham—with £5 billion of new investment in local government, bringing the total settlement to £69 billion.
As I said before, £40 million alone was for the recovery grant for Birmingham, so I feel the Government are doing as much as we can, but we always stand ready to do more if needed.
Gurinder Singh Josan (Smethwick) (Lab)
Over 14 years, Birmingham city council lost £736 million of funding under the previous Conservative Government. Does the Minister agree that that is a big recipe for the situation we are in now? Does he agree that both sides, the council leadership and the trade unions, need to put public rhetoric to one side, get around the table and sort this dispute out?
Jim McMahon
If we look at the progress made on equal pay, the trade unions and the local authority worked in partnership to agree a way forward. In the end, they recognised that they all care about the same things: they care about the people of Birmingham, about the workforce and about the long-term viability of the local authority. When common interest is applied, people can find a way through. I hope, going forward, that all interested parties can get around the table, find a way through and get the bins emptied.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Residents of Birmingham will have heard the Minister talk about monitoring, overseeing and reviewing what is happening. What they want to hear is what the Minister is going to do. Can he make it clear that if the talks are not agreed, there is no return back to work and the bins are not emptied, he will intervene and throw all the resources that are required to break the strike and ensure the bins are again emptied in Birmingham?
Jim McMahon
There is a difference in tone between resolving the strike and breaking the strike. We absolutely stand ready to support the council and the workforce more generally, who do want the situation resolved as many who work for the council also work in the city. They take pride in being local public servants and they want the city to be proud of the council in return; for many, that is being tested. We absolutely stand ready to work with the council and find a way through this issue. The council is working hard to resolve it; it understands that people are angry and frustrated, and that, from a public health point of view, it just cannot continue.
Bradley Thomas (Bromsgrove) (Con)
Chelworth Road in my constituency is a road of two halves: on one half of the road, which is in the Wythall division of Worcestershire, the rubbish is collected; on the other side, which falls under Labour-led Birmingham city council, the rubbish is piling high, council tax is going up by 21% and a major incident is being declared. Labour is delivering rubbish, while the Liberal Democrats are prancing around on their hobby horses on social media. The Minister talks about priorities, including putting residents first and delivering value for money, but surely this is further proof that only Conservative councils will deliver on those priorities. Will the Minister tell us at what point he will step in to get those bins collected?
Jim McMahon
The hon. Gentleman is trying to set up the good council and the bad council by party politics, but I am afraid that has been exhausted. The previous Government did this all the time: they would parade councils of a different colour around for shaming, whatever the issue, while for one of their own they would just hope that everything would move on and that nobody would notice. We are not interested in doing that.
This is about a new partnership, where national Government and local government work together to resolve these issues. If a Conservative council finds itself in trouble—there have been some, I should say, and there may be more in the future—I am not going to name and shame it and parade it around in the way the hon. Gentleman is trying to do today. We stand ready to work with councils of all political parties in the interests of the people at a local level, because that is what matters.
Sir Julian Lewis (New Forest East) (Con)
May I give the Minister some friendly advice and suggest that he does not try to write this off as a little local difficulty? I am half expecting to hear him use the phrase, “Crisis, what crisis?” He cannot be blamed for not remembering the winter of discontent—using the wonders of Wikipedia, I see that it happened a year before he was born—but I can assure him that the Callaghan Government and the Labour party never shook off the pungent smell of the rubbish piling in the streets on their watch. He really does not want to have the same thing happen to him.
Jim McMahon
I will tell the right hon. Gentleman what stinks: hearing Conservative MPs line up as if they were not in government for 14 years and creating the conditions for this to happen, while the foundations of local government were eroded. With that record, I would honestly keep the advice to myself if I were him.
Lee Anderson (Ashfield) (Reform)
We have Birmingham Labour MPs campaigning for a new airport in Pakistan; meanwhile, we have rats the size of cats feasting on a month of rubbish in Birmingham, courtesy of Labour’s trade union friends. My simple question to the Minister is this: when will this rubbish be cleared?
Jim McMahon
We both share the intention and ambition that it will be cleared as soon as possible. There should not be any further delay in reaching an agreement when it is quite clear that the volume of waste to be collected is proving to be a waste hazard. With his background as a councillor, the hon. Gentleman will know that it is for the council, as a local employer, to resolve this matter with the trade unions by agreement. That is what we want.
Local Authorities (Changes to Years of Ordinary Elections) (England) Order 2025
Jim McMahon Excerpts(1 month, 1 week ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
It is a pleasure to serve under your chairmanship, Ms Hobhouse. This Government have been clear on their manifesto commitment to widen and deepen devolution across England. We have moved at pace to realise the benefits of devolution for more people in more places. However, a lot of change is being undertaken at the same time. That requires focus and capacity. We have been clear on our vision for simpler, more sustainable local government structures and the transfer of power out of Westminster through the devolution revolution. Taken with the work being undertaken to fix the broken audit system, introduce a new standards regime and rewrite the local government funding formula so that it truly takes into account needs and resources, we are doing the hard work of rebuilding—not simply returning to what was there before, but using a new approach that is both efficient and more effective.
Anneliese Dodds (Oxford East) (Lab/Co-op)
I note that, in his helpful statement released two days ago, my hon. Friend made it very clear that core to the Government’s approach is ensuring that there is a starting point, which is
“to support and empower local leaders and to respect their knowledge, expertise and insight.”—[Official Report, 24 March 2025; Vol. 764, c. 25WS.]
That listening approach was also in evidence in the comments that he made to the District Councils’ Network conference, where he stated clearly that the 500,000 figure was potentially an “average”. Does he agree that the clarity that bids of significantly below 500,000 are acceptable is useful for smaller cities that are engines of economic and housing growth but which have populations significantly below the 500,000 mark?
Jim McMahon
We have tried to strike a balance between answering the demand—the fact that all 21 counties have submitted to the interim phase is testament to the support in the system for this—and finding enough of a framework at a national level so that areas know what to report to, while building enough flexibility to take into account that England is very different in its construct and make-up. There are huge variations between urban centres, rural communities and coastal communities. In forming local authorities that have a clear anchor that can be understood and respected by the local community, we have to allow for flexibility in that system.
The statutory invitation that went out was clear that that means population sizes of 500,000 as a starting point, but we have been clear with the County Councils Network, the Local Government Association and the District Councils’ Network, and in trade press interviews, that we will see a range. Some will say that the mid-300,000s is right for them, and we are seeing some city districts looking at moving their boundaries outwards. But others will say, “Actually, our county does not have that characteristic—we haven’t got that city anchor or coastal issue that might be present elsewhere—and we think the best option for our place is maybe 600,000 or 700,000”.
We want to be flexible enough to take into account local representations as we receive them. Our working assumption is that when all that balances out, we will end up with an average of 500,000, but who knows? We need to see the submissions that come in, but flexibility is important, and it challenges the idea that this is a top-down, mandatory system of uniform councils that all look the same, regardless of local circumstances. It is not that. It is very important nationally that we give the framework and direction—and we have done that—but this is about co-operation and partnership. I appreciate that that point has been picked up on.
We have been clear about our willingness to drive forward to deliver this vision, and to work with local councils to support communities to fix the foundation of local government in delivering that ambition. Alongside the English devolution White Paper, I wrote to all places in the 21 areas inviting them to express a clear commitment to delivering to the most ambitious timeframe, and to flag any requests for a delay in elections to take place.
Where authorities made such a request, we have judged it to meet a very high bar that was rightly set, and we have kept our commitment that clear leadership locally would have to be met with an active partner at a national level. We have taken the necessary decisions to postpone local elections where it will help to smooth the transition process and deliver the benefits of mayoral devolution, supported by strong and stable local government reorganisation as quickly as possible. We are now working with those areas to prioritise in parallel the necessary steps to explore the establishment of new mayoral authorities in time for the May 2026 mayoral elections, and to deliver plans for new unitary local government.
On devolution, public consultations are already under way, running from 17 February to 13 April in these areas. More than 12,500 responses have already been received in that process. We are getting on with delivering reorganisation as well. All district and county councillors in the two-tier areas, and their neighbouring smaller unitary authorities, were invited, and I am pleased to say that every area—comprising of councils of all political stripes—has responded to the invitation to reorganise. They shared with Government an interim plan containing updates on their thinking about options for creating new unitary councils. The response demonstrates without doubt the groundswell consensus from communities that change is overdue and needed. Earlier this week, I made a written statement setting out the details of this, providing parliamentary transparency and supporting the commitment we made to ensure there was active reporting during the course of the process.
Local engagement with Members of Parliament, public sector providers, residents and other key local partners will now be led by the councils as they develop detailed proposals to establish strong, stable unitary councils that are fit for the future. This order is essential to allow the first wave of this ambitious programme to be delivered. It grants postponements for 12 months only, and only for the nine councils whose requests met the high bar we set.
We are extremely clear that these decisions were made on the basis of local requests to free up capacity and enable the practical steps needed, which would not be feasible so quickly if the 2025 local elections went ahead in those areas, for reasons that are self-evident. These areas have demonstrated the clear and strong local leadership and the necessary ambition to drive forward the programmes to the timelines that the Government have set out to deliver for those areas, including taking the difficult decisions that are needed.
Let me address the points that have been made. I sense that a lot of the debate today has picked this process out as being unusual in English local government, but it is not. Members will know that between 2019 and 2022, 30 sets of elections were cancelled: 17 to allow preparatory work for local government reorganisation, which is what we are talking about here, and 13 as part of legislation to allow the unitarisation process to take place after the proposals had been submitted. So this is not unusual; it is a natural part of the cycle to free up capacity and enable those proposals to be developed— I can go through the list, and provide the details in writing.
But I do think we need to be careful here. First of all, we absolutely believe that this is the right thing to do, and that is not because we have an ideological view about how local government should sit. All the Members in this room are here because we care about local government and local communities, and we cannot have a hand-to-mouth funding regime where local government is just not sustainable. We have to find a solution that really fixes the foundations, and this is one small part of that—there is a lot more we need to do—but it is important. If we did everything else but not this, it would just not hold together. I think that it would devalue—I will be honest and direct about this—the work that local leaders have put into this at a local level to build consensus and show leadership. I am not talking about exclusively Labour leaders; in many areas, they are Conservative, Liberal Democrat or independent. We have a collective responsibility to at least mirror the leadership that they have shown across political parties in the interests of their communities, and to reflect that here in the national Parliament. I do not think that is too much to ask.
Vikki Slade
For clarification, I do not think we would object to the process or intent of reorganisation— I have been through it as a local leader, but the process was quite different. I am thinking about the suddenness and the shortness, and my concern is about consultation in advance of the decision to take this particular route. When Bournemouth, Christchurch and Poole and Dorset were merged in 2019, I think the process started in 2016, and then went through a local referendum in one place, which actually said, “No, thank you.” That went ahead anyway, but the decision was taken after a period of consultation. I ask the Minister to reflect on whether local consultation in advance of a decision to cancel an election would have been a better option, had time allowed.
Jim McMahon
To be clear, there is not time to do that. In the finance settlement this year, I think we have done a good job in building a bridge to the multi-year settlement, but it is only a bridge. That does not answer the fundamental, underlying questions that are leading to the financial vulnerabilities of local councils.
We have had a cash injection—£5 billion of new money is not insignificant—and it has made a significant difference. Introducing £600 million for a recovery grant gets the money to areas that need it most. That is reflected in the fact that we have not had a single section 114 notice issued as a result of financial distress. But let us be clear: 30 local authorities needed exceptional financial support through the budget process, so a lot of work is required here.
As we move to the multi-year settlement, we have to reconcile reorganisation within the lifetime of the three-year multi-year settlement, so that at the end of the settlement, the transition has been completed, the funding has been settled and all councils in England are on a firm footing for the future. Had we waited, we would not have achieved that, and we would have allowed the reorganisation to go beyond the multi-year settlement. I think that would have provided more uncertainty for a system that is quite fragile at the moment, when actually, it needs certainty and direction. We are not doing this because we are gung-ho, but because we believe that these structural reforms are needed and necessary.
I absolutely believe not just in consultation, but in collaboration and co-operation. That is about how ideas and proposals can be co-produced. It is for local areas to do that. There will be a statutory consultation on the proposal, and that will happen as a matter of course. But in the end, it is for local areas to make sure that they are having those local conversations and are coming forward to the Government with proposals that mirror what the local desire is, within the art of the possible. I have confidence that local leaders have that shared commitment, too.
This order, which was laid on the 11 February, is essential to delivering the Government’s commitment on devolution and reorganisation to the fastest possible timescale, for the reasons that I have set out. The order was made using delegated powers, which have been given in primary legislation granted here, and have been previously used in the same way. All the appropriate steps were taken, and both process and precedent were carefully followed. Nothing is being imposed on local areas—the Government are committed to the devolution priority programmes, and the emerging proposals for the new unitary councils are, by their nature and result, bottom-up. All requests for election delays to deliver reorganisation and devolution to the fastest possible timeframe follow direct requests from local leaders of the affected councils.
Devolution and strong councils with the right powers will mean that hard-working councillors and mayors can focus on delivering for their residents on a stable financial footing. It will strengthen the democratic accountability of local government to local residents. A final point that I have not covered is the ordering of by-elections that will take place. The guidance will set out that by-elections will be dealt with in the usual way; they will not be affected by this order.
Lewis Cocking (Broxbourne) (Con)
It is a pleasure to serve under your chairmanship today, Ms Hobhouse. I draw Members’ attention to my entry in the Register of Members’ Financial Interests as a local councillor.
I have just a few comments. The delay in elections for these local authorities was not really a choice for them; it was a mandate from Government. The Government’s White Paper set out their expectation for all two-tier areas, regardless of their personal views, to move to unitary structures. The Minister said that 21 areas have replied to the Government’s letter in support of that move, but the Government’s letter was intended to make them come forward with proposals. The Government have quite clearly said, “If you do not come forward with proposals for your area, we are going to do this to you.” They will introduce a managerial direction within the White Paper.
Jim McMahon
I think it is important that the record reflects the actual situation. First, there was no mandating, because this is about postponing elections to allow reorganisation; it is not about the reorganisation process itself. To be clear, 18 councils applied to have their elections postponed and we agreed to nine, because not all met the high bar that we have set. Also, to be clear, 24 of the 33 elections that were due to take place in May 2025 are going ahead as normal.
Lewis Cocking
I thank the Minister for his intervention. However, if the Government’s White Paper sets out their expectation for two-tier areas to reorganise, those two-tier areas do not have a choice. They either get on that train and do what the Government are telling them, or they wait by the sidelines and get forced to do it by the Government. This is definitely a top-down approach, not bottom-up.
The decision to delay elections should not be taken lightly. Other Members have touched on this, but nine councils have asked for delays in elections because the Government are making them reorganise. What happens if they are delayed for longer than 12 months? When we were last in government, three areas were done over three years, so the Government are very ambitious in doing nine.
If we are to believe what is in the news about a 15% reduction in the civil service, how will the MHCLG cope and get those nine councils done within a year? As has been alluded to already, how will the MHCLG get consensus within the local area, and how will it take those councils through that process of reorganisation? The process should be thought about over a longer period of time, rather than rushed through over 12 months. I have concerns that some of these elections, which we may agree today should happen in a year, will actually need longer.
I also have concerns about what the Boundary Commission will do with these delayed elections, and its capacity to draw up new boundaries for whatever authorities come forward. We have touched on the half a million population figure; but I have seen very little evidence to show that that is an appropriate figure for a new authority. The Minister’s own authority is well below half a million people, so I do not understand where the Government have got that number from—I think they have just plucked it out of thin air.
Lastly, it has been suggested that, when we go through this process, there will be loads of money for local government, as local government will save millions of pounds. I ask the Minister to comment on this: Somerset council has gone through reorganisation to a unitary structure; it has asked the Government to increase council tax bills by 7.5%, which was accepted, yet it is still in financial difficulty. So if reorganisation is the answer to all of local government’s problems, why do we have a council that has just gone through the process still asking for extra money, and still in financial difficulty?
Jim McMahon
All those are fair questions. On the timetable, there are in effect three tranches. The first tranche is Surrey, which is being brought forward because there cannot be devolution as a single county unless we do the reorganisation and create a combined authority after that. This is fairly well covered, but it has quite significant issues of debt that need to be reconciled as part of that process. Surrey has 9 May as the deadline for its final proposals.
Areas that have had their elections postponed are in the devolution priority programme. They have until 26 September to submit their final proposals. All other areas have until 28 November to submit their final proposals. I will just say that there is sufficient time. Surrey is clearly the exception, and that is an accelerated timetable by agreement with the local authorities in that area—we will ensure that adequate resources are provided to meet that challenge. For all other areas, however, we believe that there is sufficient time. I should also say that the difference between September and November as the end date takes into account the election period, recognising that the preparatory work that would take place otherwise would not take place then.
Martin Wrigley
The issue with most such situations in the past has been not only a short period of time for councils to respond, which they typically have managed to do, but the prolonged period of radio silence once those responses have been sent to Government. Can the Minister assure us that the Government will respond quickly to the proposals, so that councils can get on with them?
Jim McMahon
We absolutely understand that that gap of silence can be undermining to the process. Even conflicting advice or information allows people to fill in the gaps or exploit the situation. Clarity is needed. I think we have done that. Whenever we have brought a statement to the House, it has been extremely well attended. I think that the two on this issue have run for more than an hour, in terms of parliamentary interest.
On the interim proposals, the deadline was on Friday and we submitted the written statement to Parliament on the Monday; we submitted that the minute that Parliament reconvened. So we do want to ensure that that communication is there.
We will marshal departmental capacity. We are speaking to the LGA, to the County Councils Network and to the District Councils’ Network, and we appreciate the leadership that they have shown. They have been quite challenging in their representations at points, but I think they have done an excellent job in reflecting the on-the-ground reality back to us, and we have appreciated that.
On the areas in scope, we have provided an additional £7.6 million to enable proposals to be developed, so it is not a financial pressure entirely on local government to do that. We want and expect, in some areas, that they will have a unified proposal that they can rally around and for which there is broad support, as that would make everyone’s lives easier. We also live in the real world and understand that there may be different views on what a good outcome is. I think that is legitimate, and it should be allowed for in the process. The Government’s role at that point will be to take a view on the proposal that best meets the criteria set out in terms of efficiency, sustainability and, importantly, identity, as having that local anchor is a very important part of that too. With that within the process, we can take into account the range of different views.
I have covered the population size issue, in terms of that being a starting point. That does not mean that it is the end point for every area; but we do not want to reset that number. I can guarantee that if we were to say, “Right, it is not 500,000 any more; it is the mid-300,000s, and that is the new starting point,” I would get a queue of councils asking, “Can we have a conversation about the mid-100,000s?” That completely undermines the principle for doing local government reorganisation and takes us back to square one. Having a starting point that can be flexed, with some give—I think going to the mid-300,000s is give, but let us see, given that the other way is give too—is where we need to be.
Even though this SI of course deals with the election postponement in these county areas, district council elections will follow, and with a fair wind—I accept there is a way to go yet, and we are still in the consultation phase, which is important—they will also have mayoral elections in those areas for the first time. For the first time, they will actually be able to receive further powers and further budgets from central Government in a way they have not before. So, this should be welcomed. For democrats in the room, this is additional democracy, accountability, freedoms and flexibility, which is genuinely rewiring the way that we govern England. It is long overdue.
Non-Domestic Rating (Multipliers and Private Schools) Bill (changed to Non-Domestic Rating (Multipliers) Bill)
Jim McMahon ExcerptsTuesday 25th March 2025
(1 month, 2 weeks ago)
Commons ChamberRead Full debate Non-Domestic Rating (Multipliers and Private Schools) Act 2024-26 View all Non-Domestic Rating (Multipliers and Private Schools) Act 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Amendments as at 25 March 2025 - (25 Mar 2025)
The Minister for Local Government and English Devolution (Jim McMahon)
I beg to move, That this House disagrees with Lords amendment 1.
Madam Deputy Speaker
With this it will be convenient to discuss Lords amendments 2 to 19, and Government motions to disagree.
Jim McMahon
First, I am grateful to Members of both the Commons and the Lords who have so diligently scrutinised the Bill throughout its passage. Before I address the amendments tabled by the Lords, allow me to remind the House of why we introduced the Bill in the first place. This Government have committed to transforming the business rates system, and the Bill is a first step on that important journey. We want to achieve a sustainable system that is fit for the current economic landscape, and where business growth is supported and ratepayers pay their fair share. I thank the noble Lord Khan of Burnley for taking the Bill through the other place and for being so thorough in his approach. I also thank officers of the Ministry of Housing, Communities and Local Government and my private office for all their work on the Bill.
The Government oppose all the amendments before us today and I will provide further explanation as to why. At the Budget, the Government explained that we wanted to introduce new lower multipliers for qualifying retail, hospitality and leisure properties from April 2026 to address the uncertainty of the temporary, stopgap support provided by the annual RHL relief. Business rates represent a stable source of revenue for local government, meaning that this permanent tax cut must be sustainably funded. That is why the Government also announced our intention to introduce a higher multiplier for all properties with a rateable value at or above £500,000. This Bill makes provision to enable the introduction of those new multipliers, so this is the first step towards delivering on the Government’s manifesto commitment to transform the business rates system to one that is sustainable, protects the high street and is fit for the 21st century.
Kevin Hollinrake (Thirsk and Malton) (Con)
On a point of detail, the Minister says the Bill is a “first step”, so will there be further reforms, following these reforms, to the rest of the business rates system to meet his manifesto commitment to replace the current business rates system completely?
Jim McMahon
I am not going to pre-empt any further decisions on this, other than to say that this represents an important and significant step forward. As a constituency MP, he, like me, will have heard from many small businesses—retailers, hospitality providers or leisure providers—who appreciated the support during covid, but were very clear that there was a cliff edge and that that support was coming to an end. The previous Government did not provide any certainty about what followed, so the Bill ends that uncertainty and hardwires in a permanent relief system to ensure those important businesses that are the foundation of our communities and our economy are supported through the tax system.
Kevin Hollinrake
The Minister has already said, as he has in previous speeches, that this is a “first step”, but now he says it is a “permanent” measure. I agree with him that business wants certainty, so it is important that businesses understand: is this now a permanent position that will not be changed, or a first step?
Jim McMahon
The answer is that it is both, as I will go on to explain in more detail. It is an important first step, and the relief that is provided, funded through the higher rate properties, will be hard-baked into the system, notwithstanding any future support that may well follow, which we are not pre-empting today.
Lords amendments 1, 6, 7 and 12 would remove qualifying healthcare hereditaments from the higher multiplier, and Lords amendments 2, 5, 8 and 11 would do the same in relating to anchor stores. Considering the challenging fiscal environment, it is vital that this permanent tax cut is funded sustainably. The Government have been clear that they will do that by applying the higher multiplier to all properties with a rateable value at or above £500,000. That accounts for less than 1% of all properties and is the fairest approach. The impact on healthcare properties is limited. As set out in the other place, of the 16,780 properties at or above the £500,000 threshold based on the current rating list and rounded to 10, only 350 are in the health sub-sector. Of those, 290 are NHS hospitals and only 30 are doctors’ surgeries or health centres.
At the autumn Budget, the Chancellor fixed the spending envelope for phase 2 of the spending review. The Government are considering the full range of departmental priorities and pressures as part of the spending review, and that includes any impact of the higher multiplier on public sector properties, such as schools and hospitals. I urge the House to disagree with those amendments.
We recognise the importance of anchor stores, and we are doing a great deal to support the high street in this Bill and elsewhere. While the largest anchor stores may be caught by the higher multiplier, they are often part of large retail chains that will have a number of properties with rateable values below £500,000. Those businesses will, therefore, benefit overall from the lower multipliers.
Suella Braverman (Fareham and Waterlooville) (Con)
I appreciate the points that the Minister is making. In Fareham and Waterlooville, we have some fantastic pubs, including the Golden Lion in Fareham, the Chairmakers in Denmead and the Heroes in Waterlooville. Many pubs are hubs of our community and make a valid contribution to the local economy, but they have been trading under challenging circumstances and have been asking for a cut in business rates. What will be the effects of the Minister’s position today?
Jim McMahon
The Bill provides a cash saving for exactly the types of business that the right hon. Member talks about. We all understand the importance of pubs to our towns, villages and estates, not just as businesses in the economy but as places for the community to convene, to meet and to build relationships and networks. That is exactly why the measures are being brought in, and in a permanent way, because pubs needs certainty. They know the rising costs of supplies, carbon dioxide and energy have put significant pressure on pub operations, and these measures provide long-term stability that bakes in the support the Government can offer into the system.
Many pubs will be free houses and they will be independent. However, a number of pubs will be part of a brewery chain with managers in place. The measures take away the cash cap of £110,000 per business, allowing, for the first time, multiple operators to benefit. That will benefit pub chains, as well as high street stores, such as Home Bargains, Boots and other retailers. Those businesses draw in footfall, which then supports independent retailers as well. The proposals are rounded and provide long-term stability that is properly funded in a responsible way. On that basis, the Government oppose the Lords amendments as laid out.
Lord’s amendments 3, 4, 9 and 10 are concerned with bringing manufacturing properties into scope of the lower multiplier. If we widen the scope of the lower multipliers in that way, it will dilute the support available to RHL properties or jeopardise the ability of the Government to sustainably fund the lower multipliers. We need to be clear that this is not a wide-ranging offer, but targeted deliberately at supporting our communities, high streets and town centres. That is why the Bill focuses on RHL support. The Government are supporting the manufacturing sector through other means. For those reasons, I urge the House to oppose the amendments.
Lord’s amendments 13 and 16 require the Government to undertake a review of how the provisions to introduce new multipliers may affect businesses whose rateable value is close to the £500,000 threshold for the higher multiplier. The review would need to be put before Parliament three months prior to 1 April 2026 in order for clauses 1 to 4 of this Bill to come into effect. These amendments probe around the way the multipliers in the business rates system currently operate. Those hereditaments on the standard multiplier, or in the future on the higher multipliers, pay rates on that multiplier calculated on all of their rateable value, and not just the rateable value above the threshold. That, of course, generates cliff edges in the rates bills for hereditaments as they move between thresholds, and we acknowledge the presence of those cliff edges—it is a matter of fact.
At the autumn Budget, the Treasury launched a discussion with business on the “Transforming Business Rates” paper. This specifically highlights these cliff edges in the system and considers whether they may act as a disincentive to expand, so I can assure the House that we are already looking at the precise issue identified in the amendment. Reforms are being taken forward through the transforming business rates work and will be phased in over the course of the Parliament. Therefore, we believe Lords amendments 13 and 16 are unnecessary.
Lords amendment 14 would require the Government to commence a review that examines the merits of creating, within three months of Royal Assent, a separate use class and associated multiplier within the non-domestic ratings for retail services provided by fulfilment warehouses in England that do not have a material presence on high streets. The noble Lord Thurlow, who put forward the amendment, made it clear that this use class would apply only to business rates. As he explained in the other place, the key task is to identify those warehouses, as distinct from warehouses used by, say, high street retailers—warehouses that may otherwise look the same.
The Lords amendment would bring together the Government and professional bodies working on business rates to identify those warehouses. We are already exploring that objective through an existing project. The digitalising business rates project will allow us to match property-level data with business-level data from His Majesty’s Revenue and Customs to improve the way in which we target business rates, and to identify property and businesses in the way that the Lords amendment envisages.
Chris Vince (Harlow) (Lab/Co-op)
I did not intend to intervene, but I was looking through the amendments, and I see that a lot of them focus on exemptions from the business rates. Does the Minister agree that the way to look at supporting businesses in, for example, the manufacturing industry is through other means, not through changing the business rates?
Jim McMahon
We welcome scrutiny through amendments and the insight that the other place can provide, just as we welcomed scrutiny in the evidence sessions and Committee sittings; it adds value. We need to be honest: it is natural for Members to want to widen the scope of legislation during its passage, and to include more. In Government, we have to deal with the art of the possible, which means balancing a number of competing interests, not least the impact on taxpayers in the round. The Bill is targeted at those who need it the most—communities and local economies—and it is fully funded to ensure that it is sustainable. We cannot draw the legislation so wide that it does not stand the test of time and does not cover its own cost. That would not be responsible, and certainly would not be sustainable.
Lords amendment 14 would require the Government to implement the recommendations of the review. Given that we do not know what those recommendations would be, I trust the House will understand that we cannot accept an amendment to accept them blindly in advance.
Finally, Lords amendment 15 and consequential Lords amendments 17 to 19 would strike from the Bill the clause that removes charitable rate relief from private schools that are charities. We are unable to accept these Lords amendments. This Government made a manifesto commitment to raise school standards for every child, break down barriers to opportunity and ensure that every child has the best start in life, no matter where they come from or their financial background. Achieving our ambition involves meeting our commitment to removing the VAT and business rates charitable relief tax breaks for private schools; the approach and design of this policy has been carefully considered in the light of that. The measures are necessary in order to raise the revenue to deliver on the Government’s commitment to education and young people, and to improve the state sector, where—let us be clear—90% of children are educated. This Government are prepared to take the tough but necessary decisions to deliver on those bold commitments, so, as with all the other amendments brought here from the other place, I cannot accept these Lords amendments. I hope that the rest of the House follows suit.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.