Tees Valley Combined Authority: Best Value Notice

Jim McMahon Excerpts

Thursday 3rd April 2025 Written Statements

[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 Excerpts

Consideration of Lords message
Monday 31st March 2025 Commons Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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

Monday 31st March 2025 Commons Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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

Wednesday 26th March 2025 General Committees

[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?

--- Later in debate ---

[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 Excerpts

Consideration of Lords amendments
Tuesday 25th March 2025 Commons Chamber

[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?

--- Later in debate ---

[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.

Local Government Reorganisation

Jim McMahon Excerpts

Monday 24th March 2025 Written Statements

[The Minister for Local Government and English Devolution (Jim McMahon)]

This Government was elected on a manifesto that pledged to fix the foundations of local government alongside a transfer of power and funding out of Westminster through devolution. That means creating clearer, more sustainable local government structures to unlock crucial efficiency savings, with more resources directed to the frontline. This reform will mean more accountable structures, making it much clearer for residents who they should look to on local issues, with fewer, but more empowered local political leaders, who can focus on delivering for residents. This Government will not waste this opportunity to achieve stability for local government across England and increase value for money for council taxpayers, so they are no longer paying an inefficient two-tier premium. I would like to update the House on progress on local government reorganisation.

Interim plans

Last month I invited all councils in two-tier areas and their small neighbouring unitary authorities to work together to develop proposals for reorganisation. I requested interim plans by Friday 21 March to contain updates on thinking in areas about their options for creating new unitary councils.

I recognise the challenges of producing these plans and I would like to thank members and officers in district, county and unitary councils for their hard work in preparing these documents. This demonstrates the commitment of colleagues across the local government sector to drive forward better outcomes for their citizens. We know that in many areas, local leaders have been working together on their plans for reorganisation for many years and are pleased to be invited to work with Government to seize this opportunity.

All district and county councils in two-tier areas and their neighbouring small unitaries were invited, and I am pleased to confirm that every single area—comprising councils of all political stripes—have responded to the invitation to reorganise, demonstrating without doubt the groundswell consensus from communities that change is overdue and needed. These areas are: Cambridgeshire and Peterborough; Derbyshire and Derby; Devon, Plymouth and Torbay; East Sussex and Brighton and Hove; Essex with Southend-on-Sea and Thurrock; Gloucestershire; Hampshire, Isle of Wight, Portsmouth and Southampton; Hertfordshire; Kent and Medway; Lancashire, Blackpool and Blackburn with Darwen; Leicestershire, Leicester and Rutland; Lincolnshire, North Lincolnshire and North East Lincolnshire; Norfolk; Nottinghamshire and Nottingham; Oxfordshire; Staffordshire and Stoke-on-Trent; Suffolk; Surrey; Warwickshire; West Sussex; and Worcestershire.

Criteria for delivering new authorities

The Government have set out their criteria for these changes to provide confidence that new councils are right for individual areas. On the population size, the guidance is clear that new councils must be the right size to achieve efficiencies, improve capacity and withstand financial shocks. As set out in our “English Devolution” White Paper, we outlined a population size of 500,000 or more—this is a guiding principle, not a hard target—we understand that there should be flexibility, especially given our ambition to build out devolution alongside local government reorganisation.

The published guidance sets out that “there may be certain scenarios in which this 500,000 figure does not make sense for an area, including on devolution, and this rationale should be set out in a proposal.” In discussions with individual councils and parliamentarians, and in interviews given throughout the process, the Government have reinforced this position to aid local discussions. Equally, it may be decided that population sizes around this figure, or greater than it, are the best fit locally. Instead of presenting a top-down solution for each area, our starting point is to support and empower local leaders and to respect their knowledge, expertise and insight. This approach is in line with the new partnership between Government and local government.

There is a clear expectation that though councils will change, the communities they serve remain, along with the strong sense of history, identity and belonging which gives them the character local people hold dear. That matters, and it will not just be accepted, but celebrated for the pride of place it instils.

Support

Local government reorganisation is a complex process, and we are at the beginning of this journey. We will continue to reset the relationship and work in partnership with the sector to ensure they receive the necessary support as we work together to deliver this ambitious agenda.

Councils need our full backing and support to drive these changes forward—and this Government are acutely aware of the difficult financial situation facing all councils following a decade of financial mismanagement by the previous Administration. I am pleased to announce that £7.6 million will be made available in the form of local government reorganisation proposal development contributions, to be split across these 21 areas. This is the first time that capacity funding has been made available for reorganisation proposals, recognising the priority that this Government attaches to this. Further information will be provided on how this will be allocated and we intend to make payments as soon as possible.

Beyond funding, we understand that practical support and learning from those who have undergone reorganisation before is crucial. My Department has been working closely with the LGA, trade unions and sector bodies to develop support for areas. The LGA Hub will host a central repository for practical advice and support. A programme of webinars and events will be available and the LGA and other sector bodies will be launching networks for peer support.

Next steps

The submission of interim plans is not a decision point. It is the next stage in the process and enables councils to engage with the Government on the issues that matter locally and receive support to develop their full proposals. We expect local leaders to continue working collaboratively and proactively with each other, including by sharing information.

In the coming weeks my officials will follow up with areas to discuss their interim plans, provide feedback and understand the collaboration and information sharing arrangements. The Department will be speaking to Surrey as a priority in the coming days, then with councils on the devolution priority programme during April, and other areas after the local government elections in May. For Surrey, the deadline for proposals is in May and for other areas later this year in September or November.

My Department will consider these proposals against the criteria set out before consulting and taking a decision on which of those proposals will be taken forward and implemented. This is a statutory process, and affirmative legislation will be needed to establish new councils and abolish any of the predecessor councils.

Conclusion

I acknowledge this is a significant undertaking—the largest structural reform of local government in half a century and a fundamental part of our project to reform the British state, so that it delivers for working people. We need to push forward together and deliver these changes, so communities can see the benefits of simpler structures and so councils can deliver better value for money public services. Local leaders are central to our mission to deliver change for hard-working people in every corner of the country through our plan for change, and our councils are doing everything they can to stay afloat and provide for their communities day in, day out. I will update the House after receiving full proposals and explain how they will be taken forward.

[HCWS545]

Council Tax Reform

Jim McMahon Excerpts

Wednesday 19th March 2025 Commons Chamber

[The Minister for Local Government and English Devolution (Jim McMahon)]

I congratulate my hon. Friend the Member for Hartlepool (Mr Brash) on securing this Adjournment debate on the important issue of council tax. I am grateful for the work and research that he and the all-party group have put into their argument for council tax reform.

The Government take seriously the issue of how councils are funded, and the impact on local taxpayers. Council tax is an important part of the funding that councils require to deliver a range of over 800 vital services. For 2024-25, council tax makes up over half of councils’ core spending power. Individual councils are responsible for setting their own level of council tax, taking into account their local circumstances. Indeed, council tax is the balancing item in the local council budget.

As my hon. Friend will know, the ability to raise revenue from council tax is determined by the number of domestic properties within a local authority area, and by the value of those properties in 1991. That means that places with a high number of more valuable properties are often able to raise more than an area with lower-value properties, despite setting the same or commonly a lower level of council tax. However, as he said, the Government have ruled out a revaluation of council tax in this Parliament. That means that we must find other ways to address the discrepancies in tax-raising ability through other means.

The last Conservative Government committed to improving and updating the way in which councils are funded, through the fair funding review, but that work was not delivered. We will make good on that commitment and implement long-awaited funding reforms through a multi-year settlement in 2026-27—the first in over a decade. We have recently consulted on the proposed objectives and principles for local government funding reform. In that consultation, we propose to update the way we account for council tax in determining local authority funding allocations, so that future allocations more effectively account for the differing ability to raise council tax income across the country.

As my hon. Friend has pointed out, that means that somewhere like Hartlepool, where the tax base is weaker because of the high number of homes in bands A to C, will not be treated the same as an authority in the south-east that has a high number of homes in bands E to H and therefore has greater council tax revenue-raising power. That will be part of a wider set of changes to improve the approach to funding allocations within the local government finance settlement by ensuring that they reflect an up-to-date assessment of need and, importantly, local resources. Those funding reforms are part of a comprehensive set of reforms for public services to fix the foundations of local government. That will be done in partnership with the sector and on the principle of giving forward notice and certainty to allow time for councils to plan for the future.

Although the Government recognise the arguments in favour of council tax revaluation and reform, there are currently no plans to reform council tax in this Parliament, as I have said. Significant changes to local government structures, governance, accountability, audit, standards and financing are taking place alongside an ambitious programme of devolution and, of course, local government reorganisation. I say that because we cannot overstate the amount of change taking place in a very short time within a system that has been left quite fragile, as my hon. Friend will know, after 14 years of mismanagement by the previous Government.

[Sarah Dyke]

Somerset council is in the position of having to raise council tax this year, but a recent external assurance review reported that a significant proportion of the council’s budget shortfall was attributable to decisions taken by the previous Conservative Administration, who recklessly froze council tax for a record six-year period. In the light of the pressures on councils across the country, will the Minister commit to giving us a timetable for reform so that councils can plan well ahead and deliver essential services?

[Jim McMahon]

That is an important point. In a sense, we can draw up a fairer and more balanced system, and build more security into it. What a system can never do is accommodate every localised decision and how it presents. In the end, there has to be local checks and balances, and that must come through the ballot box. It sounds as if voters in the hon. Member’s area have cast that judgment.

We are committed to reform and to moving at pace, but we recognise in doing that that the system is fragile. We are undertaking reform of the business rates system and revaluation, and a lot of devolution deals will come forward where intricated settlements are being worked towards, which will be important. All that, of course, rests on local government being strong and stable enough to support it. We completely recognise all the issues around adult social care, children’s services and temporary accommodation, which mean that councils are being overwhelmed. There is £69 billion available through the funding allocation this year, £5 billion of which is new money, and for the first time ever there is £600 million through the recovery grant, which is about bridging to the multi-year settlement. We have recognised the urgency and depth of the crisis that many councils find themselves in, but we are also honest in saying that it will take more than seven months to repair 14 years of harm. We are getting on with the job, and we are determined to get it right.

[Richard Foord]

Shire counties have had their settlement funding cut from more than £300 per person in 2015 to less than £200 per person now. Does the Minister recognise that counties such as Devon have huge road networks to maintain, and that that difference in funding helps to explain why roads in Devon are falling apart?

[Jim McMahon]

I think that after the last 14 years, roads in quite a lot of England are falling apart. That is why we injected another £500 million into pothole repairs this year, because we know that local people feel that issue acutely. We also recognise, as I said before, that this will take longer than seven months.

On financing, we are clear that the current formula needs to be reviewed. It is not good enough any more to keep on having a formula that is not fit for purpose, and which is supplemented by top-ups that change depending on the whim of the Government of the day. If this is a genuinely fair funding formula, it must be fair when tested. That means that wherever someone is in the country, and whatever their local circumstance, they know that those issues have been taken into account. Some of that will involve deprivation or the ability to raise tax at a local level, but some of it will involve demand on services, including rurality. We must ensure that in the review we rebuilt trust and confidence as well as sustainability, and the hon. Gentleman has my commitment that we are determined to ensure that that work is done with integrity.

We recognise the urgency to fix the foundations, and to tackle the underlying issues that we have talked about. For all the criticisms of the current council tax system—many of which are completely legitimate—it has some advantages. First, it is a settled tax that taxpayers understand, and notwithstanding the uncollected element that was mentioned earlier, pound for pound it has a high collection rate. On that basis, revenues are relatively predictable, which means that local authorities have greater certainty for their financial planning. Council tax is genuinely local. The money is collected locally, retained locally, and authorities will make decisions on the band D level based on their local requirements and delivery priorities.

[Grahame Morris]

Reforming council tax is an enormous problem and I do not underestimate the scale of the task, but does the Minister recognise that council tax is even more regressive than the poll tax it replaced? The system particularly affects my constituency, Hartlepool and the north-east, and other regions as well, where people are paying a premium for living in the poorest communities with the fewest services and facilities. Does he accept that council tax is widening inequalities in our country?

--- Later in debate ---

[Jim McMahon]

I accept that there are inherent issues with council tax, not least the way that the banding system works. Because of the inherent land and property values in less affluent places, people in a lower-band property in a poorer part of the country will pay more for public services than those in more affluent properties elsewhere. Those more affluent places can collect sufficient amounts to fund local public services, where other areas clearly cannot do that. The situation has been made significantly worse by a Government who removed that central support over a decade, so council tax is taking on a significant burden of the weight of local public services. We are keen to address that imbalance through the funding review that we are undertaking.

Members will know that local authorities have control over the discretionary working age council tax support scheme, and the council tax system also includes a range of discounts and exemptions to reflect the personal characteristics of occupiers and to support those less able to pay. These include the single-person discount, exemption for student and disregards for carers, the mentally impaired—a term I would not choose to use, but that is the term used in legislation—and apprentices. The Government will consult on the administration of council tax later this year and consider the case for modernising support in the system for those who need it.

However, I recognise the challenges that council tax creates for some taxpayers and local authorities. I therefore want to reaffirm that this Government are keen to continue working with my hon. Friend the Member for Hartlepool and his APPG to understand the issues in the council tax system and what options for reform are available to us.

Question put and agreed to.

Spelthorne Borough Council: Best Value Duty

Jim McMahon Excerpts

Monday 17th March 2025 Written Statements

[The Minister for Local Government and English Devolution (Jim McMahon)]

All hon. Members will recognise the importance of having well-functioning local councils which provide essential statutory services local residents rely upon. Local councils must be fit, legal and decent and this Government are aiming to fix the foundations of local government. Today I am updating the House on the statutory inspection of Spelthorne borough council and the steps I am proposing to ensure a focus on reform and recovery, alongside and within the wider context of having invited proposals for unitary local government in Surrey.

Best value inspection report

It is a matter of public record that Spelthorne borough council has significant debt leverage. Spelthorne’s debt stands at nearly £1.069 billion—as of January 2025—which is 62.2 times its total service expenditure and is the second highest level of debt for a district authority in England, after Woking.

A capital review by the Chartered Institute of Public Finance and Accountancy (CIPFA) highlighted concerns around governance and decision making. Following this, on 8 May 2024 the then Secretary of State, the right hon. Michael Gove, commissioned an inspection of the council and its compliance with its best value duty. He appointed Lesley Seary as lead inspector, alongside Mervyn Greer, who were later joined by Peter Robinson and Deborah McLaughlin. Inspectors were asked to report their findings by 31 July 2024. The deadline was subsequently extended to 31 January 2025. The inspectors completed their inspection and submitted their report to the Secretary of State for Housing, Communities and Local Government, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) and, as statute requires, provided a copy to the council. 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 some positive features at the council, such as strong resident engagement and positive local partnerships. The report also notes that the council has already taken positive steps to make improvements, including against recommendations made in the CIPFA review, such as the suspension of the planned housing developments and cessation of further borrowing for this initiative after determining it was no longer viable. However, the report documents serious concerns across a number of areas which I consider to be against its best value duty:

On Continuous Improvement: The report describes the council as having a “poor record” of adequately addressing recommendations from external reviews and the inspectors have no confidence in the council’s ability to make the changes “without significant external support”.

On Leadership: The report highlights that the council lacks consistent leadership, strategic direction, constructive challenge and a robust corporate plan. Optimism bias clouds officers’ awareness of risks, and to some degree the council has been “blindsided” by the financial situation.

On Governance: The report concludes that the council’s “poor, late and incomplete reporting, together with a lack of audit and a reluctance to accept and act on challenge” has “severely undermined informed decision-making” and there is a culture of secrecy.

On Culture: The report describes member and officer relationships as poor and deteriorating, with both sides describing a culture of mistrust and broken relationships which are “hindering constructive discussions” on key financial, housing and asset issues. Members and officers do not share an understanding of their respective roles. Inspectors consider the council to be insular and in denial of the situation it faces.

On Use of Resources: The report concludes that a lack of long-term planning, risk management and an “overly-optimistic reliance” on property markets has led to the authority’s financial strategy being unsustainable.

Compliance with the best value duty

I have carefully considered the report and other relevant material, including findings from the CIPFA review, recent reports from the council’s external auditors, and the corporate peer challenge conducted by the Local Government Association. I am satisfied that Spelthorne 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 15(6) of the Local Government Act 1999 to implement an intervention package that ensures the council’s compliance with its best value duty. The proposed intervention includes the appointment of commissioners to exercise certain and limited functions as required, for five years. The commissioner team, if appointed, would consist of a lead commissioner and commissioners with expertise in finance, commercial investment and governance. The council will be directed to prepare and agree an improvement and recovery plan to the satisfaction of the commissioners. I would like the commissioners to report on progress against this plan after the first six months, and then at six monthly intervals. I need to ensure the council’s compliance with its best value duty: the commissioners’ assessments will provide assurance to residents and strategic partners. The council will also be directed to actively engage with the commissioners while reviewing and implementing any proposals for unitary local government.

Representations

I am inviting representations from Spelthorne borough council on the respective inspection report and on the proposed intervention package by 28 March 2025. I want to provide the opportunity for members and officers of the council, and any other interested parties, especially the residents of Spelthorne, to make their views on the proposal known.

I made clear in my written statement of 5 February that potential proposals on unitary local government must demonstrate how local councils have sought to work together in coming to a view that best meets local needs and is informed by local views: given the potential implications for the proposals currently being developed by councils in Surrey for unitary local government, I have taken steps to ensure that this report will be seen by all relevant parties across the area. I will carefully consider all representations and any other evidence received, before deciding how to proceed with the council.

Conclusion



The proposal to intervene in Spelthorne borough council is not taken lightly. The proposed intervention package is designed to strengthen and accelerate the improvement work needed at the council. I am confident that the proposal will address the failings identified and is necessary to ensuring the council’s compliance with its best value duty. I hope that with focus and oversight, improvement will come at pace and that it will not be necessary for the commissioners to use their powers. However, they must be empowered to do so if they consider that the required improvement and reforms are not being delivered.

I am committed to working in partnership with the council to provide the necessary support to ensure its compliance with this duty and the high standards of governance local residents and service users expect.

I will deposit in the House Library a copy of the inspection report I have referred to, which is also being published on gov.uk today. I will update the House in due course.

[HCWS527]

Local Government: Nolan Principles

Jim McMahon Excerpts

Tuesday 11th March 2025 Westminster Hall

[The Minister for Local Government and English Devolution (Jim McMahon)]

It is a pleasure to serve under your chairmanship, Sir Desmond, and to attend this debate. I am grateful to the hon. Member for South Leicestershire (Alberto Costa) for securing it.

A key commitment of this Government was to strengthen the standards regime and integrity in public life. Specifically, that means a very active commitment to working together to create a fit, legal and decent local government sector that is equipped to rise to the challenge and opportunity of increased devolution of power and resources from Whitehall. Our proposals to achieve that were set out in the “English Devolution” White Paper, published in December last year, which included measures to fix our broken audit system; improve oversight and accountability; give councils genuine freedoms to work for and deliver in the best interests of their communities; and, with particular reference to the theme of this debate, improve the standards and conduct regime.

We are wasting no time in getting on with the task. The day after the “English Devolution” White Paper was published, we launched a 10-week consultation on strengthening the standards and conduct framework for local authorities in England. The consultation, which closed on 26 February, sought views on reforms to the standards and conduct regime so that the public can have trust and confidence that all councils in England can be effective and well governed.

Although he did not go as far as I might, I think the hon. Member for South Leicestershire was hinting that the previous Government, in the early part of that Government—with the removal of the standards regime and the audit regime, and measures such as the removal of councillors’ pensions in England—engaged in what many of us now reflect were, in large part, acts of municipal vandalism. They took away the architecture that allowed local government to thrive. The challenge is big, but we understand that we need to take significant steps to improve the situation.

All of us here today know the seven principles of public life—honesty, integrity, objectivity, accountability, selflessness, openness and leadership—which have underpinned the ethical standards of all public office holders for the last 30 years. They are, and have been, the foundation of the code of conduct for Members of the House, the ministerial code and all who serve in local government and the wider public sector.

Doug Chalmers, the current chair of the Committee on Standards in Public Life, gave a speech at the Institute for Government in November last year on the 30th anniversary of the establishment of that committee. In that speech, he reflected on the three golden threads that Lord Nolan had set out that need to be delivered alongside the Nolan principles—first, the code of conduct; secondly, independent scrutiny; and thirdly, education.

As Lord Nolan acknowledged, the Nolan principles were not a code of conduct, but the values that would underpin a code. An effective code needs to clearly detail the behaviours that those in public office must observe to repay the public’s trust and confidence, as the hon. Member for South Leicestershire referred to. The principles are a foundation, but the behavioural code is not quite there. There are examples in the councils that the hon. Member mentioned, and actually in some councils right across the country, of bad behaviour being far too common. That cannot stand.

While the standards proposals that the Government have been consulting on are for whole system reform, at their foundation is the proposal for a mandatory code of conduct. We believe that a mandatory code is vital to achieving consistency across all the various types and tiers of local government. The current regime simply requires all local authorities to adopt a code that is consistent with the Nolan principles. Some take the de minimis approach of simply listing the seven principles. Others have very detailed local codes. That lack of consistency is not helpful to the system overall. It is confusing and means that we cannot have confidence that all are judged to the same standard equally across the system.

That does not happen in the devolved nations. Scotland, Wales and Northern Ireland all have mandatory codes of conduct in place, based on the Nolan principles but setting out detailed interpretation of the expected behaviours.

[Steve Barclay (North East Cambridgeshire) (Con)]

Where there are bad behaviours, that often results in significant legal costs to the local authority and settlement payments. The Government are giving more powers to combined authorities. Does the Minister agree that where a combined authority incurs significant legal costs and settlement payments relating to staff who have left, whether employed or interim, that information should be shared in a timely fashion with board members? If so, will he write to me to confirm that that is the Government’s position?

[Jim McMahon]

We have set out a very clear expectation about transparency and all authorities, whether they are local authorities or combined authorities, always acting in the public interest and being up front about information that they hold. That expectation is clear. I can respond in writing in more detail.

[Steve Barclay]

Can I press the Minister on that point? Does that transparency include sharing those settlement payments and legal costs with the authority’s board members? It strikes me as remarkable if those costs are not even shared with board members. He has very helpfully clarified that he expects transparency. I would like that transparency to be with the public—perhaps he can say something on public disclosure—but can he at least confirm that the information should be shared with board members?

[Jim McMahon]

I will follow up after the debate on the example that the right hon. Gentleman is referring to. I commit to finding out a bit more information through the Department and will respond in writing. As a matter of principle, it is not unreasonable to expect that board members, as opposed to the wider public, are informed about matters of financial relevance to the operation of the board. That seems fairly self-evident to me. If he provides more information on the particular case, which I am not familiar with, I will certainly come back to him on that.

I am enormously grateful for the more than 2,000 responses that we received to the Government’s standards consultation. We are working at pace to analyse the results. We will think carefully about how to take into account the views that were expressed for each of the proposals that we have set out. The Government response will be issued in due course, and after its release, we will continue to work actively with local government on developing detailed implementation.

The hon. Member for South Leicestershire mentioned reorganisation, and although I completely acknowledge the examples of poor behaviour that he identifies—I have witnessed such things in some authorities, too—I would be careful not to attach local government reorganisation as an inherent risk to the standards and behaviours of councillors. I think this is cultural, and it is about a lack of framework and, honestly, slightly a result of a standards regime that has not got teeth.

There are some members who know that what they are doing is not right, and that that is not just about free speech, but about abusing the position they hold and the freedoms. We often see that relationship, where elected members who are holding court in the council chamber attack officials on the top table who have no power to respond themselves. We see that power imbalance taking place. I suspect that most elected members who are behaving in that way know exactly that their behaviour is not okay, but they also know that the standards regime has no teeth to deal with that, so what are the consequences? I would be careful not to attach that behaviour to the reorganisation point, because we want to rebuild the system from the ground up, so that every council in England—whether they are part of the 21 counties going through reorganisation or are among the rest—is subject to the same robust standards regime that does have teeth.

Let me return to the subject under debate by dealing with some of the points about not allowing the system to be used for political ends and how it has to be held up to all scrutiny at all levels. This is about having a proportionate system that can hold up to scrutiny and be tested, but it has to be mandatory. It must have sanctions that matter, including the power of suspension, the power to withhold allowances, if that is correct, and the power for premises bans, if there is a safeguarding risk at play. We have examples where councillors can be on police bail for sexual assaults, and during police bail, they can attend council meetings and attend the premises. That clearly would not be acceptable to most members of the public, but the current regime allows that, and that cannot be allowed to stand. Perhaps more controversially, the system should include disqualification in some cases for more serious breaches.

[Dan Norris]

Will the Minister address my point about interim officers, or perhaps write to me if there is not time today?

[Jim McMahon]

I will return in writing to the point about interim officers being able to move around and whether they are held to the Nolan principles as a founding principle. This debate is more about the standards regime that governs elected members in that context, and that is the consultation that we undertook.

I have no doubt that the Nolan principles will continue to be enormously influential in contributing to the effectiveness of local government. They are a prescription for the values to foster a culture of integrity and ethical behaviour. This Government are committed, at the heart of our ambition for the whole of local government, to creating a fit, legal and decent local government sector, and that is what the public have a right to expect. To be effective, local government must serve to foster vibrant local democracy. It must encourage a wide diversity of talented people to step forward to represent their local communities in that position, and we are committed to working to that end.

Question put and agreed to.

Town Deal Funding: Owens in Hastings

Jim McMahon Excerpts

Monday 10th March 2025 Commons Chamber

[The Minister for Local Government and English Devolution (Jim McMahon)]

I congratulate my hon. Friend the Member for Hastings and Rye (Helena Dollimore) on securing this evening’s important debate, and I thank her for speaking so powerfully on behalf of her constituents. She is a passionate champion for Hastings, and is leading the charge to ensure that not a single penny of Government investment in that town is wasted. We have a number of things in common; we are both Labour and Co-operative Members of this House, but we were also both in Hastings and Rye on 8 September 2022 when the late Queen passed away. Apart from the profound sense of how important and significant that day was, what was very clear from speaking to those who are now my hon. Friend’s constituents was the high regard she was held in. I am glad that that was reflected in the result of the election.

Before I turn to the main subject of the debate, I will speak about the funding that the Government are putting into my hon. Friend’s constituency. Last week, my Department announced up to £20 million of funding and support for Hastings through our new plan for neighbourhoods. It will help build a thriving Hastings, strengthen the local community and allow residents to take their own decisions on things that affect them. We are also giving Hastings £15 million for our community regeneration partnerships, which will help provide more affordable housing in the town and fund improvements at the Hollington youth hub. Those investments come on top of the £24.3 million town deal for Hastings.

Our town deals are based on local partnerships and local decision making, and they are led by local town boards. I know my hon. Friend is a member of hers, and I know that she champions her area extremely well. I am pleased to see that the town deal in Hastings is well into delivery and is beginning to deliver results on the ground, although I hear her concerns about Owens entertainment centre, which I will turn to in more detail.

When my hon. Friend raised this issue in the House last year, I was disappointed to learn about the closure of Owens and any money wasted under the previous Government. Although the decision to invest in the project was taken by Hastings borough council and the town board, it goes without saying that it is deeply disappointing when projects fall through. I understand that the project at the former Debenhams site was due to bring the building back into use and create more leisure facilities and, importantly, local jobs. Following the closure and the company responsible going into administration in October 2024, the owner has retaken possession of the building and the space has been re-advertised for lease.

I hear the concerns of my hon. Friend and her constituents loud and clear regarding her constituents rightfully getting their money back. Although the funding comes from the UK Government, the responsibility for local town board management sits with the town board and formally with Hastings borough council as the accountable body for the town deal. I understand that Hastings borough council issued legal letters last year regarding potential action to recover the £150,000 from the towns fund that was allocated to CFEC Ltd, which ran Owens entertainment centre during this time.

I will be direct, as my hon. Friend was direct, and say that there are plenty of unanswered questions. What we do know is that the Conservatives, when they were in government, received £2 million in donations from its owner. We also know that under their watch, this now-closed amusement centre received more than £150,000 of taxpayers’ money. The simple question we do not yet know the answer to is: why? Why might this millionaire Tory donor have needed a top-up from the taxpayer to open a bowling alley? There are concession owners in the dark, ticket holders confused and, importantly, 31 staff members without a job. I am sure they would like to know the answer to that question, too. I am also sure they would like to know whether the Conservatives, given what has now come to light, have any intentions, for the benefit of the local community, of returning all or part of the donations that they received?

Following the news that CFEC Ltd had gone into administration in October ‘24, a claim was lodged with the administrators to recover the £150,000. My officials will continue to stay up to date on the situation through our town deal monitoring and regular conversations with the council.

On town deals more widely, my hon. Friend the Member for Nottingham North and Kimberley (Alex Norris) was pleased to offer an extra year for delivery recently, taking the end of the fund to March 2027. We all want to see quick results, but colleagues in this House and in councils have reiterated how challenging it has been for projects, especially with cost inflation. This Government have listened, which is why there is now an extra year of funding to get those projects over the line. My officials are working with areas where the extra year is taken up to ensure that delivery stays on track.

Let us now look at the broader picture. The last Government tied places up in knots with their short-term initiatives and funding pots, all with very different rules and timetables. Far from driving growth, that bogs places down in bureaucracy, complexity and uncertainty. Moving ahead, we will set out a refreshed approach to local growth funding in the multi-year spending review in the spring—an approach that simplifies funding, with less red tape and more local choice. This Government’s defining mission is growth, and we are determined that nowhere will be left behind. Together, we will work in partnership with people on the ground and with local authorities in Hastings and in every corner of the country.

Question put and agreed to.