Local Government Finance

Alan Whitehead Excerpts

Monday 18th July 2011 Commons Chamber

[Mr Pickles]

My hon. Friend makes a reasonable point. It has been said many times at this Dispatch Box that the problem with the existing system is that it does not take into consideration the difference between poverty and sparsity. There are whole sections of Essex and the Thames corridor where poverty exists but is simply not recognised by the formula. Our system will react very quickly, because the business rate value can show, in year, where things are going right and where they are going wrong. Many elements of the existing formula are rather outdated and very unreliable.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I am reminded of Garrison Keillor, the American humorist, who describes Lake Woebegone as a place where

“all the children are above average.”

Does the Secretary of State intend to have a year zero in order to achieve the outcome he has described, perhaps in 2013, whereby the present arrangements for business rates would be frozen and the change would start thereafter? Or is he proposing a change before that date? If he is proposing a change after that date, what does he mean by an area that “benefits disproportionately” from growth? Will he define “disproportionate” for us?

[Mr Pickles]

Of course I would be happy to do that. I am sorry that the hon. Gentleman’s joke fell rather flat, but it was funny in retrospect. We will be adjusting the figures in 2013, assuming that we have leave to bring in the Bill, and we will provide an update on the latest figures because there are certain problems, particularly with regard to population. Members should understand that the figures will be based on the fact that relative need was increased to 83% so this is a very progressive settlement in terms of proportion, particularly for areas of relatively low income. Once the figures have been arrived at, we will continue with the new system.