Public Service Pensions Bill

Debate between John Healey and Robert Neill

Tuesday 4th December 2012 Commons Chamber

[Robert Neill]

I have worked it out; it must be well over 30 years in chambers of one kind or another around London. We do not always come to the same conclusions, but I take on board the expertise that he brings to this topic. I agree with his point that it is important, when dealing with the schemes that he and I have been involved with, to give the members of the schemes an assurance that they will have a secure pension in future.

I have spent most of my life dealing with the local government pension scheme, and I am going to talk about that today. Indeed, I should declare an interest as a member of that scheme. I recognise that change often raises concern and creates a measure of insecurity, and it is the job of those of us who have governance of these schemes, locally and nationally, to deal with that. As my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) pointed out, however, the biggest cause of insecurity and the biggest risk to scheme members would be the lack of a secure financial basis for the future of the scheme. That is why the Government’s reforms are necessary; that is the most important reassurance that we can give to people.

There are other important points that we can take on board in the context of the amendments, and I want to talk about the local government schemes in particular. It has already been recognised in the House that they fall into a different category because of their substantially funded nature, which places them in a different position, and because of the considerable diversity within the sector. There are a number of schemes involved, and they generally have a good management track record and a system of management that creates transparency and democratic accountability. I hope that we can ensure that the regulations that will finally embody the schemes will recognise those differences.

I agree with the right hon. Member for Wentworth and Dearne (John Healey) that we should take at face value the assurances given by those on the Treasury Bench, and I have no hesitation in doing so. I put it as gently as possible when I say that there has been a degree of needless raising of concern among scheme members, perhaps—dare I say it?—for partisan reasons. That is unhelpful.

[John Healey]

The hon. Gentleman is urging us to take at face value the statements from those on his Front Bench. Let me tell him what the Economic Secretary to the Treasury said in Committee about the concerns over the fair deal. He said that

“it is important that we consider in full the views of all stakeholders, including of course those who will be affected, through further consultation before making a final decision on the issue.”––[Official Report, Public Services Pensions Public Bill Committee, 22 November 2012; c. 459.]

I put it to the hon. Gentleman that, taken at face value, that suggests that the final decision has not yet been taken, contrary to the agreements reached with the trade unions on pensions reform.

[Robert Neill]

The right hon. Gentleman will know, as a former local government Minister, that there has already been considerable consultation and discussion on the shape of the local government schemes. In any event, there is to be a formal consultation as well. I do not read the same connotations into the Minister’s words as the right hon. Gentleman does. That is not my reading of the discussions to which I was party when I was a Minister. However, the right hon. Gentleman is right to suggest that we should be as transparent and upfront as possible in our discussions with scheme members.

Local Government Finance Bill

Debate between John Healey and Robert Neill

Wednesday 31st October 2012 Commons Chamber

[Robert Neill]

If I were a lawyer, like my hon. Friend, I would be advising the parties to try to come to some negotiation rather than litigating, if I might put it that way, as it would not be in the authorities’ interest to get into a dispute. The general approach has been, of course, that in the two-tier areas the bulk of the incentive should rightly go to the planning authority, as its members have to take the decision to allow development that may sometimes be controversial. It is right for such an authority to say to its electors, or to the people who sometimes complain about what the planning authorities do, that there are benefits to come from looking at the bigger picture, some of which will be captured for the local communities. I can see why that would be a sensible development, but it does not mean that I have become an advocate of unitary restructuring. It might be simpler, but the fact remains that the two-tier option has been taken into account in respect of the structures put in place by the Bill.

[John Healey (Wentworth and Dearne) (Lab)]

Will the hon. Gentleman give way?

[Robert Neill]

If I may finish the point, I will happily give way to my old sparring partner. I think we should be prepared, as we develop the scheme, to provide maximum flexibility.

[John Healey]

I apologise for not having been able to be present at the start of the hon. Gentleman’s contribution, but I have come in at a very interesting part of his speech. Does this not show up the exact problem with two-tier areas and two-tier authorities, in that fostering and supporting economic growth is so much more than simply the planning system, as it involves education, skills and transport? Many such responsibilities in two-tier areas are held at county level rather than at district level.

[Robert Neill]

I do not see it as a problem; the issue can be grappled with and dealt with. The right hon. Gentleman and I have debated unitary restructuring on more than one occasion over the years, and we end up on different sides of the fence. My point is that through co-operation it is possible to ensure that the economic development levers, which generally sit with the county council, can be sensibly allied to the development levers, which sit with the district council. A good example can be found in Essex, as Chelmsford has a successful local planning authority in Chelmsford borough council—it might now be Chelmsford city council since the town has been given city status—and has not experienced the friction that is sometimes used as an argument to justify unitary authorities. Both the county and its county town have recognised that it is in both their economic interests to grow Chelmsford as a significant hub in that part of the world. In that case, unitary reorganisation was not necessary to achieve significant economic regeneration in Chelmsford.

I have to say that some of the downsides of unitary reorganisation that we saw under the previous Government, when it was enforced against the wishes of the local authorities, were a distraction from the serious job of getting on with economic development, promotion of the area and encouraging investment by sensible planning decisions. These issues can never be seen in isolation. The incentives in the Bill, linked with the duty to co-operate in planning terms, provide a further incentive for sensible arrangements not only between adjoining local planning authorities, but with the county authority as a highway authority, as highway considerations are often important in determining where development is acceptable and therefore where the investment might come from.

Local Government Finance Bill

Debate between John Healey and Robert Neill

Monday 21st May 2012 Commons Chamber

[Robert Neill]

I think that the right hon. Gentleman will have to make do with a potted version, given that I have only 10 minutes left and want to deal with other points as well. Suffice it to say that if he casts his eye over paragraph 37(1)(d)(iv) and (vi) of part 10 of new schedule 7B to the Local Government Finance Act 1988 —I know that he will want to do detail as we wish to do detail—he will see that the regulations permit those uplifts to be disregarded.

Those provisions have the same effect as the new clause tabled by the right hon. Member for Wentworth and Dearne would have. The Government have said that it is not our intention to reset the system until 2020, save in exceptional circumstances. I accept that for option 2 TIFs it may well be desirable to have a longer period than that, and the regulations will permit that. Enterprise zones and option 2 TIFs will be disregarded at the reset and could be disregarded for subsequent periods. It will therefore be convenient to align future resets with the revaluation period from 2015 onwards. The system will work perfectly well in practice.

In amendments 62 and 63, the right hon. Member for Wentworth and Dearne fairly recognises that central Government have, and always will have, an interest in public spending. It is unrealistic to think that central Government would not have a macro-economic view on the overall level of control over local government, and that is why we could not accept his amendment and constrain ourselves in the way that is intended. However, we have always made it clear that, over time and particularly once we have the public finances back on track, we hope to increase the proportion of business rates that are part of the rates retention scheme. We are starting at 50%, which is a considerable step forward in giving local authorities greater financial autonomy, and the provisions in the Bill allow the figure to be increased if circumstances permit. Equally, however, one has to be realistic and recognise that in an economically difficult world it would be imprudent to presuppose that the central share could be removed altogether. I do not think that any Government would envisage that. It is conceivable that in dire circumstances the share could be increased, but that is certainly not the Government’s intention; we intend to reduce it as soon as economic circumstances permit. It is therefore appropriate to maintain the existing provisions, which enable the alterations in shares between local and central Government to be considered alongside the need to maintain affordability and to protect the interests of the taxpayer and the wider economy. Whatever the proportion, be it 50% or higher, I repeat the assurance that, as is consistent with the 1988 Act, it remains the case that business rates paid to central Government through the central share will be returned to local government through other grants.

On amendment 63, we are alive to the point that the right hon. Member for Wentworth and Dearne makes, and we will take it on board when drafting final regulations. We are conscious of the potential interaction of the incentive with loss of revenue at appeals, and we have said that we will consult further on that during the summer. We have already scheduled meetings between officials and local authority officials. Against that background, I hope that the he will feel able, albeit in absentia, to withdraw his amendment.

Let me turn to new clause 6 and the related proposals from Opposition Front Benchers. I could not help but note a slightly different tone in the debate when we discussed them. I think that earlier the hon. Member for North Durham (Mr Jones) alluded to one-tune records. With respect to the hon. Member for Warrington North (Helen Jones), a one-tune record is still a one-tune record however long you play it, and I am afraid that that is what we heard from the Opposition Front Bench. It is also, I am sorry to say, a rather inaccurate one-tune record, because when one analyses the hon. Lady’s argument, one sees that it is not only a serious indictment of the system that we inherited from the Labour Government but it does not accurately portray what we are seeking to do. It is a serious indictment of the Labour Government’s record because the list of undoubted differences and inequalities between regions in the UK that she set out is in some measure, if she will forgive my saying so, the legacy of the failed, highly centralist policies of the Labour Government. It is pretty scandalous that after 13 years of regional policy and of a highly centralised local government finance system, the inequalities to which she referred exist. That is what Labour left behind.

The coalition has sought to address that legacy, even within the existing system. First, we have increased the weighting given to the needs element of the formula grant, which precisely reflects those issues, from 73% to 83%—something that no previous Government have done. Secondly, we have introduced transitional grant to deal with authorities in the greatest difficulty.

It is worth bearing in mind that need is built into the calculations in the business rate retention system. Need is part of the calculation of the baseline because the needs element is part of the formula grant, and we have indicated that we will take the 2012-13 formula grant as the baseline. The hon. Lady’s examples of the undoubted cost pressures in social services, child care and so on are, therefore, reflected in the social services element of the formula grant that we have maintained, as well as in the uplift of the needs element that we have maintained. We have placed such authorities in a better position for the starting line.

There are undoubtedly significant and sensitive services that are under pressure. Reference has been made to some of the child care cases that we know about. Those are really tough areas with real cost pressures, but under our system top-tier authorities in two-tier areas, which make up the majority of the authorities that are responsible for adult social care and children’s services, will be designated as top-up authorities. That means that they will be protected from volatility more than any other authorities in the system. They know that their top-up will be fixed for the reset period and index-linked thereafter to the retail prices index. There is particular protection in our system for authorities with the greatest need. The thrust of the Opposition proposals therefore falls at the first point.

We have said that we will share the proceeds and the risks through the 50:50 split between local and central Government. We have said that the baseline will take into account the issues that we have taken on board. We have said that baseline funding will remain fixed and that growth in budgets will be linked to local business rates growth thereafter, but with protections in place. Opposition Front Benchers have shown a schizophrenic attitude to the Bill from start to finish. They have paid lip service to a degree of localism, and they have given examples of over-centralisation that, on analysis, turn out to be the legacy of their own system. They have been in denial throughout about the need to link reform of the local government system with a realistic appraisal of the need to reduce the deficit. They have produced a set of arguments about as dysfunctional as one could find, making them the Simpson family of British politics. We have heard no credible alternatives. They have played the same record time and time again, and they do not have much credibility. I hope that the House will resist the Opposition proposals if they are pressed.

[John Healey]

Members of another place will study the Minister’s remarks this evening very carefully and return to a number of points. I am grateful to him for his comments about TIF funding, and I was pleased by most, if not all of them. I, too, will study the Hansard record of his comments very carefully indeed. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Fire Service (Metropolitan Areas)

Debate between John Healey and Robert Neill

Wednesday 7th March 2012 Westminster Hall

[John Healey]

I thank the Minister for giving way. I thank him for his willingness to meet us and for charging his officials to work with those from the metropolitan authorities to get to the bottom of the situation and to consider the future. Does he recognise that there is cross-party and cross-area concern? Does he recognise that that concern is not about the first two years of the spending review; it is about years 3 and 4? The six fire chiefs, uniquely, have to come together to ensure that any cuts that need to be made are made evenly and equitably across all authorities in England.

[Robert Neill]

I will make sure that those meetings take place. The right hon. Gentleman knows that we are now moving to a new system.

Local Government Finance Bill

Debate between John Healey and Robert Neill

Tuesday 24th January 2012 Commons Chamber

[Robert Neill]

I think I can help the right hon. Gentleman and I note the very constructive way in which he makes his point. There are two things that one has to distinguish, the first of which relates to the period of setting the baseline regarding tariffs and top-ups, which are adjusted by inflation. The idea of the levy and the set-aside is to deal either with a level of growth well beyond that rate or with a loss of business rates well beyond it. The principle of the system is to make sure that beyond the tariff and the top-up a sufficient amount of growth can always come through, for those who achieve growth, so there is an incentive effect. It would clearly be wrong to define “disproportionate” in such a way as to cream off any prospect of growth. That is why it is sensible to consult local government on quantums and the methodology for achieving that.

Equally, we can envisage circumstances, although we hope they will not occur, in which local authorities suffer significant losses in their rate base, which are greater than would occur with the normal volatility of business rate fluctuations and which they can do nothing about. That is what is suggested might happen when someone moves out. We have always indicated that we intend there should be safety-net protection for such authorities, which should be paid for from a levy on what we regard as disproportionate gain. If one gives words their ordinary English meaning one sees that we are talking about a system that will not scoop off all the incentive, and I think we can talk sensibly, from the experience of local authorities, about means of achieving that. I want to assure hon. Members that that is the scenario we are looking at.

[John Healey]

I want to believe that the Minister can make this work, but the more I listen to him, the more complex and uncertain this system seems to me. I wonder whether he has really grasped this issue and whether he has looked at his own authority. In 2006-07, his authority—Bromley—suffered a loss of business rate income of more than half. In at least two of the following five years, the volatility was more than 10% of the total business rate income. In that sort of situation, which has been exemplified within his own authority, the system of top-ups and tariffs will be complex and uncertain, and some authorities will find themselves top-up authorities in one year and tariff authorities in the next. That will make essential local government planning very difficult.

[Robert Neill]

With respect to the right hon. Gentleman—I have genuine regard for his attention to detail in these matters—we have made it very clear from the outset that the top-up and the tariff will come as a consequence of the setting of the baseline, which will not change until the reset. The protection that authorities will have is that the amount of the top-up and the tariff will move with RPI, so there will not be erosion because of that. All that is separate from the set-aside—the safety net, in effect—and the levy, which will deal with significant loss when someone closes down a business or something of that kind.

[John Healey]

I am grateful to the Minister, who is being generous in giving way. Whether it is the top-up and the tariff or the set-aside and levy that are designed to deal with this wild volatility, the central point remains: many local authorities, including his, see great variations year on year in their business rate income. That makes essential financial planning and management, particularly when finances are tough, much harder to do and calls into question the very design of the new system.

[Robert Neill]

With respect to the right hon. Gentleman, he makes the case for having a decent period between the resets, with the protection of the uprating of the tariffs and top-ups. I know that he follows these matters closely, but there is a distinction between the operation of that system and the levy and safety-net arrangements. On his criticism about complication, I have to say that although he did not create it, he presided in a distinguished and elegant fashion over the four-block system. If anyone thinks that is simple, then I say that Schleswig-Holstein is a minor province of outer Mongolia by comparison. This system is simpler and more transparent and it gives an incentive. That is why my authority welcomes the principle. However, because I accept that these are technical matters, as the right hon. Gentleman knows from his experience, it is sensible that we have the flexibility to consult on the options right across the board and, when we have consulted local authorities, they will be scrutinised by the House under the affirmative resolution procedure.

--- Later in debate ---

[Robert Neill]

That is a degree of hypothesis that it is not realistic to deal with at this stage. If the hon. Gentleman looks at the detail of the regulations, he will see that the very fact that we are creating the ability to carry over year to year makes provision to deal with the point he makes.

[John Healey]

rose—

[Robert Neill]

I have been very generous and I am about to finish, but I will give way once more.

[John Healey]

The Minister has indeed been generous, but these are Committee proceedings. May I pursue the point raised by my hon. Friend the Member for North Durham (Mr Jones) about what constitutes a significant drop? Would the Minister regard as significant the £52.2 million drop in his Bromley local authority’s business rate income in 2006-07? Would he regard last year’s drop of £5.5 million as significant? For the purposes of the provisions we are debating, would he regard both, either or neither as significant to his local authority?

[Robert Neill]

With respect to the right hon. Gentleman, to answer the question in those terms would prejudge the whole point of the consultation. I shall not do that. Hon Members have probed and have, I think, received clear answers, so I hope they will withdraw the amendment. If not, I ask the Committee to vote against it.

Local Government Finance Bill

Debate between John Healey and Robert Neill

Wednesday 18th January 2012 Commons Chamber

[Robert Neill]

That sort of belt-and-braces procedure is not at all uncommon. It is our firm intention to press ahead with implementation from 2013 so that local authorities and the national economy can benefit from the Bill. As my hon. Friend the Member for Mid Dorset and North Poole said, the desirability to move to a more transparent system away from the existing model was recognised by the Lyons inquiry, which was set up by the previous Government. It recommended a move towards a localisation of the business rate, and we are taking an important step in that direction.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Schedule 1

Local retention of non-domestic rates

[John Healey]

I beg to move amendment 46, page 11, line 31, leave out ‘may not exceed’ and insert ‘should equal’.

Oral Answers to Questions

Debate between John Healey and Robert Neill

Monday 31st October 2011 Commons Chamber

[Robert Neill]

My hon. Friend is right to point out the exceptionally strong condemnation by the National Audit Office and the Public Accounts Committee of the previous Administration’s project. We have done our best to minimise the damage to the taxpayer by terminating the contract and thereby ending the haemorrhage of money. We have also reduced the maintenance costs of the remaining stations and are seeking end uses for them. We are making progress in finding an appropriate use for them, to get them off the public books as swiftly as we can.

[John Healey (Wentworth and Dearne) (Lab)]

Fire services in Hampshire, Essex, Dorset, Devon and Somerset are receiving an increase in the Government grant over the next two years. South Yorkshire, Tyne and Wear, the west midlands, Merseyside and Greater Manchester all face cuts of more than 12%. Why?

[Robert Neill]

Apart from the adjustments to which I have referred, I used the same fire resources needs formula as I inherited from the right hon. Gentleman, so he should know.