Local Government Finance Bill (Ninth sitting)
Debate between Jim McMahon and Justin Tomlinson(7 years, 9 months ago)
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Justin Tomlinson (North Swindon) (Con)
First, I thought everybody would like to share in the great news that Swindon has just voted through its second renewal of its local BID. I have been a long-standing supporter of that. The reason I am supportive, and the reason it works so well, is that it provides a co-ordinated single point of contact.
Let us look at out-of-town shopping centres, such as the McArthurGlen outlet village in Swindon. There are a number of reasons why it is a success, but one of the main reasons—I say this as a former co-chair of the all-party parliamentary group on retail—is that there is that single point of contact. Retailers know who to speak to and are given clear costs, rules and regulations, so they can weigh it up and see whether it makes commercial sense to proceed. That then allows them to trade happily. A traditional high street is complex. Is it the landlord? Is it the council? Who do people speak to if they want to secure a deal or they want to do co-ordinated marketing to help the area? This policy is clearly an extension of that successful appeal.
I was a big supporter of the principle of super-BIDs because I would like to see a lot of town centres become collective shopping centres, with all the different owners working in co-ordination to replicate the successes of the out-of-town shopping centres. I think that that has huge potential.
Jim McMahon
Does the hon. Gentleman agree that the policy also allows local authorities to look at their town centre as a business unit in its own right? When they are making decisions about the quality of street lighting, CCTV or car parking charges, for instance, they would take into account the economic impact of that and the support for their local businesses.
Justin Tomlinson
That certainly has potential, particularly now that we will be incentivising local authorities to grow their business rate base. The key is to make sure that those that have a vested interest in making their town centre a success are equipped to do so. We have had some very good success stories with the BIDs, and this is a good move by the Government to further unleash that potential.
Local Government Finance Bill (Seventh sitting)
Debate between Jim McMahon and Justin Tomlinson(7 years, 9 months ago)
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Jim McMahon
The point is about making sure that the powers that are being devolved to local billing authorities can be implemented. Critical to implementation is the affordability of the measures being taken. It is okay saying local authorities can take a hit on their tax base by reducing the multiplier, but that money must come from somewhere. We have seen time after time, and we have discussed time after time, the pressures in adult social care and frontline services when local councils just do not have the headroom required to fund the reduction.
The logical thing to do is to give all billing authorities the power to be able to teem and ladle within the business rate tax base, which is what the amendments are trying to get to. Many people would find it reasonable, as we heard in our evidence sessions, that large ratepayers—the big supermarkets and out-of-town warehouses—should probably pay more to fund the vitality of our local high streets and town centres. I think most members of the public would support that.
Justin Tomlinson (North Swindon) (Con)
I have every sympathy on the point about online trading. As the former chair of the all-party group on retail, I am familiar with the issue. I understand that the amendment is a probing one and not to be pressed to a vote, but I would urge a little caution. We must be careful about who is grouped with big business. The vast majority of retailers on the high street would be classed as big business, as they are not eligible for small business rate relief. The high street is struggling. When local authorities, as highlighted in the Portas review, were given discretion on car parking charges they continually hiked them and sped up retail’s rate of decline. I just urge caution.
Jim McMahon
I appreciate that intervention. I suppose my reflection on the Portas review is similar to the reason for the amendment. It is okay to say that councils can have the power to reduce car parking charges, but fees and charges are a significant part of local government income. At a time when revenue support grant has been snatched away and local authorities are being told they will be self-sufficient, going forward, it is difficult for them to find the headroom to reduce car parking charges. I pay tribute to the local authorities that have done so, particularly when they did it in a targeted way, to support local retail.
Local Government Finance Bill (Fourth sitting)
Debate between Jim McMahon and Justin Tomlinson(7 years, 9 months ago)
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Justin Tomlinson
One of the elements that I have picked up is the principle of pooling, whereby different local authorities and local enterprise partnerships can sit down and work together and share the benefits of this growth. The whole point is that the Government will incentivise and reward those areas that are going to support additional growth and, therefore, there is an opportunity. I will give more detail on that shortly.
I come back to the point that this will work only if really big warehouses are built. Obviously, the smallest businesses are exempt from business rates through the small business rate relief. That is a hugely important policy that I hope continues because it benefits so many of our micro and small businesses. I ran my own business for 10 years and, just before I became an MP, I benefited for a year from that. It did make a difference in what was at that time a difficult financial climate.
We must remember that there is a significant number of small to medium-sized businesses that could be in offices not much bigger than this room but are larger than would qualify under the small business rate. So it is not just about getting distribution warehouses. That is an easy opportunity for some areas, particularly for those with lots of additional land and good transport logistics. It is also about these small and medium-sized businesses. It is about working with the existing small and micro businesses to help them to make that step up. I have been involved in a number of debates where it has been said that it is a lot harder to go from four-plus employees than to start a business because there are all the additional matters to deal with. The Bill provides an incentive for local authorities to have supportive forums, engage with communities and look at how they can shape the direction of their policies to encourage growth. Again, the bonus is that not only will that generate additional business rate income, which we all recognise that local authorities need, but it will help to create that next generation of jobs.
That was a powerful point about Heathrow. It is probably the case with any national infrastructure project that the communities closer to it get the vast majority of the inconvenience, while local authorities much further away will get some of the benefits. Take Heathrow: my constituency would gain significantly from Heathrow, for the convenience of residents going on holiday and for the businesses. So my local authority has written to the Government to say, “Please proceed with Heathrow.”
If I were an MP directly under the flight path, I would have a very different postbag. Again, that is where pooling could come in. Perhaps those local communities with the most inconvenience could go to the others to say, “We would be less minded to object, to try to delay and frustrate, if you would share some of the benefits that you would get.”
The principle of pooling can be expanded much further. Innovative council leaders would use that to go to talk to other leaders to say, “Look, we can work together here. You help us so that we are inconvenienced less or rewarded slightly more for the inconvenience that we will suffer. You will get your growth; we will get some of that.” Those are discussions that can be had and we have some very talented council leaders who, I am sure, would take advantage of that.
Jim McMahon (Oldham West and Royton) (Lab)
Does the hon. Gentleman accept that councils have different roles and responsibilities? One is, of course, about economic development and growing the local tax base. The other is about being a voice of the community. A lot of the opposition to Heathrow and the flight path has been from local people who do not want their lives affected in that way.
Justin Tomlinson
Absolutely. I only focused on Heathrow because that was the one that was mentioned; there are lots of national infrastructure projects. The reality is that Heathrow will be expanded, so those residents are going to be inconvenienced.
At least this proposal would have allowed an opportunity for the respective and closest local authorities to do those deals and say, “We can see the inevitability, but we could speed up the process if we were to gain some more of the reward for the inconvenience of this national infrastructure project that happens to be sited in our area.” I would think that was a reasonable ask of my local area, if there was a demonstrable and tangible gain for that area.
Justin Tomlinson
That neatly ties into my conclusion, which is purely about blunting the maximum incentive potential. If we are to focus minds, we should say to those innovative, great local authority leaders, “We will give you the tools to generate income and growth, and create new jobs, and to be rewarded for the inconvenience of growth and development.” We have to give them every single opportunity. If we have redistribution, local authorities will keep knocking on the door repeatedly to plead with the Minister for their special cases.
I have never found an MP or local authority who does not feel that their area is hard done by in some way. We are all skilled in looking at the statistics and saying, “We have a unique, special case for additional funding.” We need to allow like-minded local authority leaders who work well together, who lead with the LGA and share best practice, to have those sensible conversations. Fundamentally, we are not a million miles apart; it is just that the Government side are probably a bit more confident and trusting of the abilities and enthusiasm of local authority leaders.
Jim McMahon
I am not sure whether there is as much difference as the hon. Gentleman has laid out. There is acceptance that if there is 100% business rate retention, we need a system of tariffs and top-ups and a safety net to catch those who have unexpected changes in their business rate base. That is different from a scheme for business rate growth, which would incentivise local authorities who are really pushing forward. I would not say that those ideas are contradictory. What we are trying to do—I hope he accepts this—is ensure that the baseline is robust.
Justin Tomlinson
As I said, I recognise that there is not a huge amount of difference between us, but my plea to the Minister is: stay strong. We were enthused by the reference to “Dad’s Army” earlier, my dad’s favourite programme. Despite the realities that we face, we need to stand firm and trust and encourage local authority leaders.
Justin Tomlinson
I am greatly encouraged. I had a gut feeling, based on what the witnesses said on Tuesday, that this was a great policy; I now feel even more certain. The quicker we can introduce this, the better.
Following on from the point about town centre regeneration, let me say why this policy will make such a difference. The Mary Portas report, which looked into the decline of traditional high streets, highlighted the point that one of the biggest problems is that local authorities continually increase car parking charges because they generate significant revenue. Unsurprisingly, with increased car parking charges year on year, town centres started to wilt and business rate income fall away. Local authority leaders recognised that, but they needed short-term ways to access money. Maintaining 100% of growth would provide an incentive to cut car parking charges, which hon. Members will be delighted to know Swindon Borough Council did; it reduced charges to £2 for four hours. Anybody who has free time and wishes to spend money in Swindon is most welcome. Unsurprisingly, footfall went up, and we will start to see a boost and regeneration.
Jim McMahon
I do not want play car parking top trumps, but I have to highlight Oldham Council’s decision to offer two hours of free parking in the town centre.
Jim McMahon
I could not possibly shine a light on my own career. One of the proposals in the Bill that we will question later—I hope that the hon. Member for North Swindon will support us—concerns local authorities that are not part of a mayoral arrangement. They will have the ability only to lower business rates, and not to increase them elsewhere to make up the cost. A lot of areas with stunted growth would not be able to afford to do that at all.
Justin Tomlinson
We will explore that in great detail, I am sure. In conclusion, I hope that the Minister will be encouraged by the great enthusiasm for the potential that we will unleash. I am sure that there are local authority leaders poised by the phone to start striking those deals to benefit from economic growth, the delivery of new jobs and the additional income that we all recognise local authorities desperately need.
Jim McMahon
It is a pleasure to serve under your chairmanship, Mr Gapes. Congratulations on steering the debate so far. We have heard a lot in the debate about the complexities of the issues. At headline level, local authorities are crying out for more power and autonomy; they want to be able to crack on and get things done, but they also want a safety net. They want to know that if things beyond their control happen, the delivery of public services in their area can be maintained and will not be affected by a large employer pulling out, or something happening to the business rate base that is entirely out of their control.
A lot of the areas that would be most affected by the downside of this proposal are those that can least afford it. My local authority in Oldham has an historically low council tax base; the majority of properties—70%—are in bands A and B. To generate the same amount of council tax as a wealthier area, people in Oldham naturally have to pay more per property than somebody in the wealthier neighbouring areas of Stockport or Trafford. When we push further pressure on to the council tax payer to pay for the pressures on adult social care, we are expecting the poorest in society in those areas to pay proportionately more of their income to fund basic services that we all need and demand.
When the Minister reaches the age to need social care, I hope the system has been fixed. At the moment, there are 1 million people who need adult social care but do not receive it. Those same people would have got the care in 2010, but are not getting it today because eligibility has been pushed back so far. Many councils now have a two-tier system. People who were already in receipt of care are, by and large, receiving the care that they have received for a number of years. It is different for new entrants. Neighbours living on the same street, with the same health conditions, needing the same support are being told they cannot have care because they are new entrants into the social care system. That cannot be right. We talk about postcode lotteries and compare the wealthiest with the poorest local authorities as a way of highlighting that, but two people in the same area on the same street with the same conditions, but coming into the social care system at different times, are receiving very different levels of social care. That cannot be right in a just and fair world, and I worry about that.
I will extend my argument to council tax, because our discussion is about localisation and the self-sufficiency of local government finance. Let me highlight the table produced by the Department for Communities and Local Government that shows an additional £5.5 billion being generated, predominantly through council tax, to pay for adult social care. If any Government were to say to the public, “How about this for a proposal? We’re going to increase your council tax by 25%. What do you think about that?”, there would be uproar, yet that is exactly what the Department’s figures propose: a 25% increase in council tax over the Parliament. For a town such as Oldham, that will mean that a band E property will be charged £2,000 a year in council tax. Imagine public support for council tax at that point.
A lot of people think that council tax just gets the bins emptied, but universal services that people pay council tax for are being removed and reduced all the time to fund adult social care and safeguarding. Pretty soon, we will reach the point where people say, “What on earth am I paying my council tax for? I am paying more and more every year and receiving fewer and fewer services.”
Jim McMahon
That is the crux of the issue. Does this Bill really address a financial system that is under pressure and probably at breaking point—we all accept that it is time to renew local government finance and put it on a strong footing—or does it just reinforce historic inequalities across the country? Unfortunately, without the detail that we have requested a number of times we just cannot make that assessment. However, we are being expected to support this because we believe in devolution and have heard the calls from councils to have more responsibility and direction over their lives.
Let us be clear what the levers of change actually are. The Secretary of State will still prescribe what council tax increase can take place. By the way, they are saying that they are not going to report to Parliament on what that will be in the future—a minor point—and we are not going to get a local government finance settlement reported to Parliament in the future.
Not only is there no parliamentary scrutiny of this new world, but councils have not got the levers of control to reflect on the number of bands in their area. They cannot change the number of bands; they cannot introduce intermediary bands; they cannot have smoother transitions. They cannot even revalue properties—the last revaluation took place 26 years ago. Why is that? Central Government duck it year after year, time after time, because they do not want the backlash they would get at local level. Our councils are cross-party, by the way. This is about the Government not wanting to take the flak from the public for putting up council tax. That could be managed at a local level. There have been calls for areas to take that responsibility through some of the devolution deals.
Nor is there any ability to change the scheme of discounts. Fallowfield in Manchester, for example—where there is a strong student population living not in halls of residence but in terraced streets—is almost a whole ward occupied by students who pay absolutely nothing in council tax. Ask Manchester City Council if it would like the freedom to reflect that.
Even if we do not introduce that measure as part of the revision of council tax, we could put the burden on to landlords. Rather than put it on council tax, we could quite easily make provision for that within the business rates Bill. One might say that landlords will just put it on the rent, but if they own a three-bedroom terraced house in Manchester they will probably get £110 a week. If they rent that house to students, however, they will probably get £60 per student per room, so they are already earning far more by renting to those students than by renting to a family. It is right that somebody pays for the headroom to provide the services to the local community.
This is not, however, about whether we prescribe at local level. My point is that we are putting a burden on council tax and on business rates. We say that we welcome leadership at a local level and local innovation, but we are not giving local authorities the levers to affect the council tax or business rate base in their areas in the way that they have asked for.
Justin Tomlinson
Rather than seeking to tax students, perhaps we could be more innovative. For example, Oxfordshire council is not keen on development, but Swindon council could take some, and we would then gain from the council tax, the new homes bonus and the growth in the business rates, while Oxfordshire would have avoided the inconvenience of the development. That is the innovative way to do this.
Jim McMahon
I am going to pay a visit to Swindon at some point—it feels like it is the hallowed land for development. I have visions of 20-storey tower blocks shadowing the town.
It is not accurate to say that we are proposing to tax students. Let us approach this issue in a mature and measured way and stop the cheap headlines. This is about making sure that there is a resilient and robust tax base in every area so that local authorities can generate the tax needed for public services in their own places.
We know the impact of not doing so. Adult social care complaints have gone up by 25%—people who are in receipt of services have increased the number of complaints they feel they have to make—and there has been a rise in 15-minute visits. This is not a cost-free exercise. Government seem to have a view that if we just turn a blind eye, say that it is not our problem and tell local authorities to find a solution—and if we just move money around without there being any extra money, which just helps us feel a bit better about ourselves—there is no problem. Well, speak to NHS England and ask what the problem is. The longer we ignore the pressures on adult social care, the more we push the burden on to the NHS. People who should be looked after in their homes are being forced into hospital to get the treatment that they need, and people in hospital cannot go back home and are having delayed discharges because the support they need is not ready for them to be able to go home. The cost of that is £820 million a year. There is a cost of doing nothing.
Local Government Finance Bill (Second sitting)
Debate between Jim McMahon and Justin Tomlinson(7 years, 9 months ago)
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Jim McMahon
Q Just to reflect some of the debate, is there a conflict in that there are different measurements of success when we talk about growth? There is net jobs and the number of people in employment; equality, or the amount of income people can get in different types of jobs; and there is square footage—building big sheds to generate large business rates, so why not? Is it not far better to have a more rounded system of taxation and incentives so that local areas can determine for themselves what type of rounded economy they need, without being driven down one particular route depending on the flavour of the Government of the day? What I hear form businesses is that they need a long-term plan, strong local leadership and long-term certainty. It strikes me that business has not had that for quite a long time.
Christian Spence: I would certainly agree with your last point. We have not tested specifically with the national membership exactly how local government taxation works, the different tools they may or may not have at their disposal in future, or any one of those other individual points. To lift it to a higher level, I agree broadly with what you say. Business is looking for a long-term stability in the system so that it can plan for its own success as well as the success of the wider community on which it is so dependent. It wants a long-term, fruitful and strategic relationship with government in its area, locally and nationally, about how to support its own growth and how to deliver skills. You talk about generating revenue through large RV sheds on the outskirts of towns. That is right, but there is often a natural tension between local government strategic plans and the draft Green Paper on industrial strategy about whether they are generating the jobs the country would like to generate.
We have no specific answer on the detail, but business is pragmatic enough to say: “If you can deliver a solution which works in our area, both for an individual business and the wider community, we will be open to those discussions.”
Sean Nolan: The skills agenda seems to be a great bridge between what a local authority can do and business needs. That plays into an opportunity in how new responsibilities are played out. On Mr Thomas’s question, the examples you quoted—RSG and public health—are relatively neutral because they are existing grants that will be funded from the quantum. I guess the real game is the new responsibilities that will be passed over with which local authorities can influence skills for the better. The skills agenda is definitely a bridge into the business agenda.
Jo Miller: The answer to the question about whether there is a more rounded way to incentivise growth and deliveries is undoubtedly yes. It seems to me that growth is a number of issues: growing your business, starting to grow the jobs in it, and having more and better jobs. It is also about the ability of people to participate in the economy. That could be through jobs or through not costing the state money by, for example, being a carer. The challenge—I tend to think of it as profit and loss rather than as just one way—is to have a taxation system that encourages growth but that helps people to cost less money. Looking at a place enables us to do that.
The challenge for us with business rates and with what is now, ultimately, a regressive system in council tax—the council tax raised per person in Doncaster is £300, whereas in Richmond upon Thames it is £900—is that there is a better way to fund what local people expect from services than through a combination of business rates and a system that relies on 26-year-old property values, particularly in the context of businesses changing in a digital economy that will not always be property based.
Justin Tomlinson (North Swindon) (Con)
Q This is a question for Mr Spence. In the briefing that you provided to us, you said:
“We also believe that there should be a maximum amount a billing authority can raise its multiplier, alongside the maximum reduction limit per year.”
Could you expand on that, please?
Christian Spence: Certainly. This is about the provision in the Bill whereby local authorities will have the power, within limits set by regulation of the Secretary of State, to lower the multiplier in their area. Again, for all the reasons we have already discussed, there are potential incentives to local authorities and businesses in doing so. Broadly, there is a challenge regarding how much that power would be used within the current fiscal conditions that local authorities see. However, although we see in the Bill that the power to raise rates at the national multiplier level will remain set by the Department and the Government centrally—the national multiplier will rise by its new indexation from 2010—local authorities appear, as the legislation now stands, to be able to lower their multiplier in any one year and do so again the following year.
If a local authority were, for example, to lower its multiplier to tuppence below the national multiplier in year one, over three or five years the national multiplier might continue to rise and we would have a position in which that local authority’s multiplier could be 10p different from the national one. As we see the Bill now, there is no reason why that local authority could not reclaim all of that 10p difference overnight in one fiscal year. If there are limits, capped nationally, by which the rate that the national multiplier can rise from one fiscal year to the next, it would seem perfectly reasonable that local authorities should also be capped regarding how much, when recovering from a previous rate, they can raise theirs from one year to the next.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
Q Mr Spence just made an interesting point regarding the way in which the multiplier may be increased at the point when a particular authority decides to change that policy of having a reduced multiplier. By definition, I take it you are, therefore, against local authorities having the ability to increase the multiplier, as has been suggested by some people.
Christian Spence: There is no real consensus across the entire chamber network about the rate and about how those work in individual local authorities. You can see examples in situations such as business improvement districts. There is potentially a very good example, if we can agree and move the Bill to a position where there is a ballot on mayoral infrastructure levies. Business might be happy to see increases in levy provided that the reasons given are clear, that it is a strategic scheme, that it is additional to that which has already been committed, and that businesses have been openly and genuinely engaged, consulted and balloted on whether that can take place.
The specific question for us is this: do we want a position where national Government are capping the national multiplier to CPI but local authorities retain an ability to raise their own multiplier by a rate greater if they have chosen to deviate from the national multiplier in earlier years?