Fire Service (Metropolitan Areas)

Debate between Lord Watts and Robert Neill

Wednesday 7th March 2012 Westminster Hall

[Mr Watts]

rose—

[Robert Neill]

I want to finish this point before I give way, if hon. Members will forgive me.

It is important to recognise that there are concerns. That is why, after the meeting organised by the right hon. Member for Wentworth and Dearne (John Healey), I indicated that my officials would be happy to meet officials from the fire authorities. I assure him that that is still the case. I will give way to the right hon. Gentleman, because of his action on this matter and because he has not yet spoken.

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[Robert Neill]

I am sorry to disappoint my hon. Friend, but I want to get this point on the record, along with other important points that need to be made for the sake of balance.

I assure the right hon. Member for Wentworth and Dearne that when we design the new system, we wish to ensure that there is fairness. That is why, in setting the baseline under the new system, the risks element will be taken into account. We have decided that, under the new system, fire and rescue authorities will be designated as top-up authorities, so that they will have the confidence of having a significant proportion of their funding protected and will not be subject to volatility by business rate growth. They will have that protection, plus the protection of uprating annually by the retail prices index.

[Mr Watts]

rose—

[Robert Neill]

I am not giving way to the hon. Gentleman. We are seeking to deal with those measures and will continue to work with authorities across the sector.

It is also important to put on the record that other funding streams are relevant to the fire service. Funding for the national resilience element is outside the formula grant. That has been referred to on a number of occasions. It is important to bear in mind that the funding for new dimension equipment, for example, increased in 2011-12 from 2010-11. The total metropolitan authority funding for new dimensions is £8 million. There are also specific grants in relation to urban search and rescue, high-volume pumps and so on. We maintain our stance that that will be treated as a new burden issue should more be required.

Capital grant funding for metropolitan authorities has been significantly increased. In Greater Manchester, the increase is 82%. Metropolitan fire authorities will benefit from £25 million capital funding, so it is not entirely accurate to talk solely about the formula grant. The Government are making other resources available to local authorities and fire and rescue authorities in particular to assist them with the need for service reconfiguration.

Local Government Finance Bill

Debate between Lord Watts and Robert Neill

Tuesday 24th January 2012 Commons Chamber

[Robert Neill]

I can tell my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) that of course we shall consult fully before we finally set, through regulations, the figure for the reset. It is important to bear in mind that a key point of the legislation is to give a proper incentive for growth, and the longer the period between resets, the greater the incentive for growth for local authorities. The shorter the period between resets, the more the growth incentive is minimised.

I am sorry that the Opposition, having claimed to be in favour of localisation, seek to introduce amendments that would significantly undermine the growth incentive for local authorities. It is even more unfortunate that when they make their case, having accused us in rather patronising tones of not doing our homework, they clearly get their homework very wrong, as I shall shortly demonstrate.

New clause 5 would implement a system that triggered an annual reset. That would destroy any incentive in the process whatever, and negate the whole growth incentive. The Opposition say we should listen to the interests of local government. In the consultation responses that the hon. Member for Warrington North (Helen Jones) cited, 78% of respondents favoured fixed resets, so their amendment ignores that 78%. It is a pity they did not do their homework properly on that one.

[Mr Watts]

Will the hon. Gentleman give way?

[Robert Neill]

No, I do not intend to give way.

The Opposition proposal would simply recreate formula grant through the back door.

In relation to the period between resets, the hon. Member for Warrington North needs to start reading things a little more carefully. She claimed that a majority favoured three years and quoted a figure of 23%. That is incorrect in relation to three years. Let me tell her what the response said: the three-year period that the Opposition proposed as their preferred reset period was supported by exactly 10% of respondents. A 10-year reset period was supported by 23%, and a period between five and 10 years had the support of in excess of 70%. If the Opposition cannot get their basic maths right, we will not have much faith in any amendments that they table on local government finance. Their rather specious argument falls, at the very least on grounds of thorough inaccuracy.

Of course it is important to ensure that we get a proper balance of need and resource at the beginning of the system, and we will do that. At the reset periods—we will discuss with the local government sector the appropriate—

Local Government Finance Bill

Debate between Lord Watts and Robert Neill

Wednesday 18th January 2012 Commons Chamber

[Robert Neill]

The debate on these amendments has been lengthy and wide-ranging, and I shall do my best to do justice to the points raised. Some of them were specific, technical and helpful, whereas others seemed to seek to reopen elements of the Second Reading debate and, perhaps, the debate on the finance settlement. I am afraid that sometimes they were rather wide of the mark. In general, I regret to say that I shall ask the Committee to reject all these amendments if they are not withdrawn because they seem to miss some fundamental points. First, the system already recognises a balancing of need and resources: that happens now and will continue to happen. Secondly, if we are to move away from a system of excessive dependency by local government on central Government grant in order to reduce reliance on central Government grant and create incentives for growth at a local and national level, we have to move away from the current, highly centralised system. Nothing has been advanced to suggest that the current system produces the transparency—

[Mr Watts]

Will the Minister give way?

[Robert Neill]

The hon. Gentleman has been very vocal, so I shall make a little progress and perhaps give way in due course. Serious points were raised in debate, and I will do my best to respond to them, if I may.

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[Robert Neill]

Let me finish the point and hon. Members may find that their intervention falls into place better.

Local authorities’ baseline funding levels are set on the basis of the 2012-13 formula grant. The calculation of the tariffs and the top-ups will then ensure that the funding at the outset of the scheme is in line with that assessment of relative need and resource. That is in our system. After that, the baseline levels, tariffs and top-up funding remain fixed and the budgets grow in line with the incentive.

If the system is reset too frequently, that undermines the incentive that we wish to achieve, and in particular it severely diminishes the value of the important introduction in the Bill of tax increment financing. For tax increment financing, which the local government world has wanted for a long time and which the Lyons review advocated introducing, it is important to have a reasonable degree of certainty about the income stream against which we can securitise. That is undermined if interference and change in the system are too frequent.

I understand the point made by my hon. Friend the Member for Cities of London and Westminster (Mark Field) about uprating in line with the RPI, and I accept that there has to be a degree of trade-off in this. It means that top-up local authorities will have a degree of assurance throughout the period of the reset that their income levels will grow by inflation. That is particularly important in the case of two-tier areas, where the county councils responsible for a large number of personal services will be predominantly top-up authorities. Much the same will apply to other precepting authorities, such as the combined and stand-alone fire and rescue authorities. I accept that arguments were made on either side, but, as is always the case, a balance has to be achieved, as I know my hon. Friend will recognise.

[Mr Watts]

I accept that revaluation too often can cause a problem, but does the Minister agree that the valuation process has not been changed for many years and the longer the period without a revaluation, the more likely it is that no Government will do it because it will make such a difference and there will be winners and losers? There has to be some sort of judgment between how long is too short and how long is too long for a review, and is not 10 years too long?

[Robert Neill]

I do not think that 10 years is too long. We think that it gives a sensible balance. But it is a good reason not to put such matters in primary legislation and to say instead that they should be developed through regulations, which, as we know, will be subject to scrutiny by the House. I should have thought that that meets the hon. Gentleman’s point. An assessment is built into the system, which is then taken forward. That is why the updating report is there.

A second point concerns the question of the central share and the set-aside. I am sure that when hon. Members reflect upon this they will realise that we have always made it clear that over time, particularly when we have put the public finances back on track, we would hope to increase the proportion of business rates to the part of the rates retention scheme. But it would be imprudent to suppose—Opposition Members would not have done so when they were in government—that there might never be an occasion when the central share might need to be maintained, or on occasion, heaven forbid, increased. I believe that the economic policies of the Government will mean that it is not necessary, but legislation has to cater for various eventualities. As I say, it is our aspiration that that should increase, but equally, as hon. Members will know, the Government have, and will always have, an interest in the totality of public spending. To expect the Government to have no control over local government finance, when it is such a significant percentage of public expenditure, would be unrealistic. That is not the case under the current scheme, and it would not be realistic in future. In that regard, some of the amendments would constrain the Government unrealistically, and I hope hon. Members will understand why.

Local Government Finance Bill

Debate between Lord Watts and Robert Neill

Tuesday 10th January 2012 Commons Chamber

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

Some 26 Members have spoken in the debate, and I too apologise if I cannot follow every one of the interventions in detail. I appreciated the contributions of my hon. Friends the Members for Crawley (Henry Smith), for Mid Dorset and North Poole (Annette Brooke), for North West Leicestershire (Andrew Bridgen), for Ipswich (Ben Gummer), for Meon Valley (George Hollingbery), for Milton Keynes South (Iain Stewart), for Nuneaton (Mr Jones), for Folkestone and Hythe (Damian Collins), for Lancaster and Fleetwood (Eric Ollerenshaw), for Thurrock (Jackie Doyle-Price), for Harrow East (Bob Blackman), for Halesowen and Rowley Regis (James Morris) and for Rugby (Mark Pawsey), all of whom spoke from experience in local government and also, significantly and importantly, often from experience in business too, because one of the Bill’s objectives is to re-establish a proper link between local councils and the businesses that they serve and the communities who benefit from growth.

It has been in other respects, I confess, a classic curate’s egg of a debate, with some thoughtful and considered speeches and some of quite breathtaking banality. When I listened, with every respect, to the hon. Member for Warrington North (Helen Jones) talking about a golden legacy left by the previous Government, I realised we had finally entered the realms of illusion. While I bring the hon. Lady back to reality—and talking of experience—let me just tell her that this grandson of a London docker is not going to take any lectures on need from the party of Tony Blair.

The reality is that the Bill is a necessary measure to clear up the mess that the Labour party made of Government finance in 13 years. Two of the Ministers responsible have done their very best to defend a local government finance system which they regard as so wonderful that it should almost be a listed building, but which has been described by dispassionate observers as incomprehensible, complex, unfair and unable to provide a proper means of distribution.

It was interesting to hear references to the Lyons review, which the Labour Government sat on for three years, doing nothing. Lyons said:

“there are no coherent or systematic financial incentives that encourage growth either for”

councils

“or, more importantly for their communities.”

Labour did nothing; we are doing something.

“The current English model of equalisation is recognised as one of the most complex in the world”

said the Lyons review, which Labour set up and ignored when it did not give the answers it wanted. We are doing something about it.

The university of Plymouth—the hon. Member for Plymouth, Moor View (Alison Seabeck) spoke earlier—said:

“the four-block model is deeply flawed and generates an inequitable allocation of this major source of local authority revenue.”

The Labour Govt did nothing about that, although they had the information; we are putting it right.

Secondly, it is shameful—

[Mr Dave Watts (St Helens North) (Lab)]

Will the Minister give way?

[Robert Neill]

There has been little time, and I intend to make a few points, if I may.

Secondly, and particularly regrettably, there was the simplistic analysis and the misleading attempt in the debate to create a false north-south divide—particularly disgraceful, it might be thought, when one has only to look at the facts and observe that over the last five-year revaluation period, when the average business rate growth in England was 5%, the following authorities had business rate growth above the average, and therefore would have benefited more than average had our proposed system been in place: Doncaster, Durham, Greenwich, Hull, Liverpool, Manchester, North Tyneside, South Tyneside, Sunderland, Sefton, Stockton, Middlesbrough—[Interruption.] No, I am not prepared to take any lectures from Labour Members when they cannot get the facts right. I will give way once, briefly.

Local Government Funding

Debate between Lord Watts and Robert Neill

Tuesday 30th November 2010 Westminster Hall

[Mr Watts]

Will the Minister give way?

[Robert Neill]

I shall make a little progress before I give way. Neither will I take lectures from Opposition Members about the need to reduce the deficit and how we should do it. The simple fact is that, thanks to their Government’s policies, about which I have not heard a word of apology, we are paying £120 million a day just to pay off the interest on their debts. That money is lost for ever to council services on the front line. If we carried on down the Opposition’s route, the pressure on local authorities would be all the greater because we would be paying up to about £100 million more by the end of the Parliament in debt interest. I am not taking lectures from the Labour party about our attempting to balance the nation’s book, when it is its prodigality that has placed local authorities under such pressure.

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[Mr Watts]

The Minister must get off the rant that we hear regularly from the Front Bench. There has been a world recession caused not by the Government, but by banks. At a time when the general public face such draconian cuts, they want to know why the Government have given the bankers a £1 billion tax cut, refuse to act on the bonuses and are now refusing to publish the size of the bonuses that bankers are receiving. The real enemy is not the previous Labour Government. They were faced with a meltdown of financial systems in this country and throughout the world, so it is not good enough for the hon. Gentleman to blame the financial crisis on that Government. As he knows, the crisis is worldwide and it is one that has been caused by the bankers, not the Government.

[Robert Neill]

That is as discredited an alibi as we hear nowadays, but I credit the hon. Gentleman for his loyalty in still trotting it out.

Council tax payers throughout the country know that their council tax doubled during the 13 years or so of the Labour Government. That was not anything to do with the world crisis. It was to do with mismanagement of the economy and, ironically, the sometimes perverse workings of the system of local government finance which that Government put in place.