Local Government Finance

Anna Soubry Excerpts

Wednesday 22nd February 2017 Commons Chamber

[Mr Thomas]

My hon. Friend makes a very good point, which is why it is all the more worrying that Ministers want to abolish the revenue support grant totally under the Local Government Finance Bill.

Perhaps I should not be too harsh on the Secretary of State. After all, he has had a rough week. He was accused by the former Conservative party chairman of “spinning the numbers”, and I hear that there was concern among Conservative Members that the Secretary of State was being hung out to dry by colleagues, so it was good to hear the Prime Minister’s spokesperson confirm that No. 10 still had full confidence in him. In truth, in just eight short months, the Secretary of State has been found asleep at the wheel twice—with a social care crisis entirely of the Government’s own making, about which he was warned well in advance; and now a business rates crisis, which he must have known might create a problem for many businesses, given that his party delayed the revaluation by two years, yet the seriousness of which it has apparently taken him until now to grasp.

[Anna Soubry (Broxtowe) (Con)]

Does the hon. Gentleman agree that if county councils such as Nottinghamshire want to do better on social care, they can look at cutting their costs by going into a unitary authority? Conservative county councillors in Nottinghamshire agreed that that was a good idea, but Labour county councillors, no doubt thinking of their allowances, decided it was a bad idea.

[Mr Thomas]

I encourage the right hon. Lady, for whom I normally have a lot of respect, not to make such partisan and, I suspect, inaccurate points, but to look at a booklet published by the LGA Labour group that gives 100 examples of the way in which Labour councils have innovated during the past few years. She may want to encourage some Conservative councillors whom she knows to follow such examples.

The Secretary of State sent a letter to all his Conservative colleagues claiming that the concerns raised about business rates by businesses and hospitals were based, apparently, on a

“relentless campaign of distortions and half-truths”.

Leaving aside the question of whether it was right to release the figures just to Members of his own party, the irony is that, as was quickly exposed, the actual bills businesses will receive are likely to be 7% higher than the figures he produced. I gently suggest that the Secretary of State is in danger of getting a reputation for being sloppy in his use of figures.

Ministers have known about the business rates revaluation for a long time. Indeed, when announcing the delay, the right hon. Member for Brentwood and Ongar (Sir Eric Pickles) explained that it was to prevent “unexpected hikes” in business rates. Why did the current group of Ministers not think to analyse its consequences a little earlier? How can it possibly be fair that the overall business rates bill for Amazon, which has avoided paying much in corporation tax despite making huge profits, has gone down while family-run businesses that have existed on local high streets for decades face huge rises in their business rates bills? To accuse, as the Secretary of State effectively did, the Federation of Small Businesses, the CBI and the British Retail Consortium of “distortions and half-truths” in their campaigning is a disgrace. He should apologise to them.

--- Later in debate ---

[Anna Soubry (Broxtowe) (Con)]

May I begin by paying a handsome tribute to all councillors, wherever they are and whatever political party they belong to? The hon. Member for Harrow West (Mr Thomas) will be pleased to hear that I am being non-partisan. Good councillors are genuinely worth their weight in gold, whatever their political allegiance—and a half-decent Member of Parliament will work hand in hand with their councillors. I have always tried to do that, whether at parish, district or borough level—and, at the higher tier, at county level, because Broxtowe does not benefit from having a unitary authority, although many other Members’ areas do. We should say a big thank you for the work that so many of our good councillors do. They have, we could argue, a critical role to play in delivering not only democracy but the key and most important of our public services. I have only stood once for a council—I was unsuccessful—but I have never doubted that local authorities do invaluable work. We often forget the value of that work.

I apologise to any Labour members of Nottinghamshire County Council; I do not suggest that they have resisted moves to go unitary because they fear they might lose their allowances, but the reality is—I am being very blunt about this—that many areas, including no doubt some Conservative and Lib Dem areas, have a genuine need for a unitary authority. I am now very firmly of the view that we should go unitary, with very few exceptions. I quickly add that, because I once had the great pleasure of going to Rugby, and I think Rugby Borough Council could de facto be a unitary, because it does a cracking job, so I am not saying every council should be a unitary. It is overwhelmingly the case, however, and I urge the Secretary of State and his ministerial team to look at the desire for more unitary authorities, and to say to many of our councillor colleagues—in the Conservative and other parties—that, “The days have gone when you could sit on a borough or district council, taking not a great deal of money by way of your allowance, and, I accept, sometimes doing a good job for your communities.” We now need to move to a unitary model to reduce costs and deliver services in a more effective and efficient way.

[Kevin Hollinrake]

I represent a constituency in north Yorkshire, an area with eight local authorities. There are eight chief executives, eight economic development officers, and eight directors of finance. That cannot be right; we need to remove tiers of bureaucracy and reduce costs in order to maximise the use of our resources.

[Anna Soubry]

I could not agree more. My hon. Friend makes a compelling point.

Broxtowe Borough Council has done a terrific job, and I pay credit to the previous authority, run by Labour and the Lib Dems, which started the sharing of back-office functions. Obviously I take the firm view that the new Conservative-run council is even better—[Hon. Members: “Hear, hear!”] I genuinely believe that it is, notwithstanding the unfortunate position that it now finds itself in. I shall address that point in a moment; my speech will not be all roses, as you can imagine, Mr Deputy Speaker. We are here to represent all our constituents, and we are also here to represent our hard-working councillors.

Broxtowe Borough Council—now Conservative run—has continued much of the good work on sharing back- office functions, but as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) says, there is only so much that such councils can do. Broxtowe continues to carry out such functions, but we are now going across borders and sharing functions with Erewash and, increasingly, with Rushcliffe. I have already told the leader of our borough council, Councillor Richard Jackson, that I am slightly worried about that. He shares my view that we should move to a unitary arrangement. That is brave of him, as the leader of a borough council—he is also on the county council—but Conservatives are increasingly being brave and considering whether going unitary would be better. If they are to make that advance, however, they will have to work even more with other authorities in the county rather than crossing the border into Derbyshire. So Broxtowe Borough Council is sharing back office duties, but as my hon. Friend said, there is only so much that it can do. Let us look at planning. No disrespect to all my great planning officers, but in reality we need one unitary authority to deal with important planning matters.

I shall turn now to the difficulties that Broxtowe undoubtedly faces. Because of the settlement, Broxtowe Borough Council will lose around £380,000 in 2017-18, and a total of £1.18 million over the next three years. That equates to an increase in council tax of about 5%. We must bear in mind that one of the reasons why the Conservatives came into power in 2015 was our promise not to increase council tax. Broxtowe does not want to put up council tax but it faces a big drop in its income in the coming years. The council, and Councillor Richard Jackson, are agitated even more by the short notice that has been given of the settlement. He told me that the administration had

“hardly any time to plan for the reductions that will be needed”.

It has had only a few weeks in which to balance next year’s budget.

It is tough to say this, but the reality is that all our local authorities are increasingly finding themselves in financial difficulty. They have a desire to deliver excellent services, but the amount of money available to them—notwithstanding the good work that so many of them have done to reduce their costs—is putting a strain on their ability to deliver the first-class services that they are determined to deliver. I make this plea on behalf of Broxtowe Borough Council. It has accepted this cut, which will be difficult—the Secretary of State was good enough to arrange a meeting with representatives of the council, and we are grateful for that—but enough is enough. Really, these must be the last such cuts to good local authorities such as Broxtowe.

I want to turn now to business rates. Having had the pleasure of working with the Secretary of State for 12 months and more, I have absolutely no doubt that he understands the needs, the pressures and indeed the joys of running a small business. He gets that—of course he does—and I am proud that we did so much in our time together to improve the lot of small businesses. However, I have big concerns about business rates. Now is not the time to go into all that, but in my view, it is a bad system. It is inherently unfair. No matter how much money a business makes—or, indeed, loses—it still has to pay its rates, and that is absolutely wrong. A business could occupy a certain space and have only a couple of people working in it, but it could be making millions of pounds in profits because it provides an online service. However, that very same space could be a shop on one of our great high streets, which are frankly struggling. We all want our high streets to thrive. The shop might employ three or four people and have a much smaller turnover, but its rates will be exactly the same as those of the multimillion-pound business in the same space. I am sorry, but that is not fair. As I said, now is not the time to discuss this, but I think the Government get the issue. The trick is to find an alternative that still raises the same amount of money, which I accept is difficult.

[Mr Jim Cunningham]

I agree with a lot of what the right hon. Lady is saying. On average, small businesses with fewer than 10 employees could face an increase in rates of around £17,000 a year. Now, that is a lot of money and it could put many small businesses, shops in particular, out of business.

[Anna Soubry]

I thank the hon. Gentleman for his intervention. We must realise that small businesses are defined in different ways. There is a profound difference between the Government’s definition of a small business, which is any business that employs fewer than 250 people, and the many microbusinesses that so many of us have in our constituencies. We should not underestimate the benefit that many of them have had from the raising of the threshold to £12,000 a year, which has been a real boost. Of course, the difficulty is that many microbusinesses, which may employ five people or fewer, still face the burden of rates. Anything that the Government can do to improve their situation will be hugely welcome.

We do not know all the details of the revaluation yet because it will not be officially announced until March, but we know that the multiplier will be reduced and my office has been asking small businesses about the effect. While some businesses will undoubtedly benefit, my concern about the situation in Broxtowe is that some pubs may face a quite unbearable rates rise. We do not have all the details of the situation yet, but I know that the Secretary of State will want to know them and I will not hesitate to give them to him. We know the value of pubs. They are important to our communities, but they are also important to our economy. They are great small businesses.

There are also concerns that rates will be reduced for some supermarkets while other businesses that employ maybe five to 10 people will find that their rates increase. In Broxtowe, the change will be neutral across the board—not the 0.7% change in the letter from the Secretary of State and the Chief Secretary to the Treasury—but with inequities in who will have to pay more and who will have to pay less. For example, we think that some businesses in Broxtowe’s three retail parks may pay less. There is often a battle between the retail park and the high street, and we think that some high street businesses may pay more than businesses in retail parks. Retail parks have big businesses—Ikea, Boots and Mamas & Papas, for example. I am not saying that they can necessarily afford an increase in rates, but they can probably soak it up in a way that a small independent business cannot. I will provide the Secretary of State with any details as they come out, and I know that he will take them on board.

I have no doubt that the Government absolutely understand the real strains in our social care system. I welcome all that has been done, but much more needs to be done. I reject the use of the word “crisis”, which is horribly overused. Our services are strained, but they are not in a crisis. In Nottinghamshire, the Conservatives have made it clear that if we are successful in May and again gain control of the county council, we will use the good provisions that the Secretary of State has put in place to allow us to raise the additional 3% through the precept. We will do that to ensure that we can raise as much money for social care as possible. However, I gravely fear that the reality is that the Government need to put more taxpayer money into the system.

I spoke to the chief executive of Nottinghamshire County Council on Friday, and such is the strain, for all sorts of reasons—I do not have time to go into those reasons, and this is not the place in any event—that Nottinghamshire is unable to offer homes to unaccompanied child refugees because of the extraordinary cost required to ensure that they are kept safe. It is important that such children get the right services and placements, and so on. At the moment, Nottinghamshire does not have the resources needed to do the right thing by those unaccompanied children. As I said at the beginning, we have to bear in mind the real strains being put on our local authorities and our outstanding councillors.

Finally, I have spoken about unitary authorities, and I urge the Secretary of State to consider being even braver, to take the bull by the horns and say to councils, “Now is the time. You must become unitary.” That is the way forward for many councils in order to save money and, most importantly, improve services.