Brandon Lewis
Main Page: Brandon Lewis (Conservative - Great Yarmouth)(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I beg to move,
That the Referendums Relating to Council Tax Increases (Principles) (England) Report 2014-15 (HC 1056), which was laid before this House on 5 February, be approved.
Madam Deputy Speaker
With this we shall consider the following motion:
That the Local Government Finance Report (England) 2014-15 (HC 1055), which was laid before this House on 5 February, be approved.
Brandon Lewis
Members on both sides of the House may well be aware that until now the Secretary of State has not missed a local government finance settlement debate in this Parliament. He sends his apologies, and hopes to join in the debate later in the evening, but, as I am sure Members will understand, he is currently attending a Cobra meeting.
The coalition Government have been working determinedly to restore the public finances, which were left in such disarray by the last Labour Government. It has been complicated and difficult work, and difficult decisions have had to be made. It is in the context of our responsible, long-term economic plan that we have been consulting on the local government finance settlement for 2014-15. Our proposals are fair and balanced, and provide an effective basis for all local authorities to transform local services and promote efficiency. Following a wide range of representations and meetings, we confirmed last week that the settlement would remain almost entirely as announced in December. This is effectively the second year of a two-year settlement, which gives councils a new level of self-determination so that they can take control of their own finances.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
May I return the Minister to the words “fair and balanced”? The average cut in spending power for 2014-15 across England will be £71.44, whereas in Birmingham it will be twice that, at £145.33. How can I explain to people in Birmingham that that is “fair and balanced”?
Brandon Lewis
I am sure that the hon. Lady will not be surprised to learn that authorities such as Birmingham have higher spending power in the first place. The 10 most deprived areas in the country have an average spending power of £3,026 per dwelling, while the average spending power of the 10 least deprived is about £1,900.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
How can it be fair that my constituents in Northumberland pay a third more in council tax than the urban residents in Newcastle, but receive £100 less per head in services? Our Government have done so little so far to deal with the unfairness that the last Government left for rural areas.
Brandon Lewis
Actually, that is not an unreasonable point. Members highlight the changes in spending power between the different authorities, but they sometimes forget that some of them had high spending power in the first place. The contrast between areas like Newcastle and Windsor is very marked.
Grahame M. Morris (Easington) (Lab)
On that point about fairness, does the Minister recognise that areas like County Durham have high levels of deprivation and need? For example, the cost of looked-after children is much greater in such areas, because the numbers involved are much greater proportionally in places like Durham, Birmingham and Newcastle than in more affluent areas such as Wokingham.
Brandon Lewis
I think the hon. Gentleman will find that that is why those areas have substantially higher spending power in the first place. He should also note that a member of his own Front-Bench team supported the petition for a fairer spread between urban and rural areas a couple of months ago.
Mr Graham Stuart (Beverley and Holderness) (Con)
Urban areas receive 50% more in central Government grant than rural areas which, contrary to what some Opposition Members suggest, have lower average incomes, so poorer people are paying higher taxes and getting fewer services. That cannot be sustained.
Brandon Lewis
My hon. Friend has made that point about rural areas with great passion on a number of occasions, and I will deal with it in a moment.
After years of doffing their caps to central Government and talking down their areas to scrape together more handouts, councils can now embrace the autonomy that this settlement gives them. Councils have risen to the challenge of delivering more for less, but local government spending still accounts for a quarter of all public spending. In the current year, it will spend £117 billion, which is £3 billion more than last year. That makes the local government bill bigger than that of the NHS and double the defence budget. It is therefore necessary for councils to continue to find sensible savings.
Mr David Burrowes (Enfield, Southgate) (Con)
Speaking of fairness, I believe that it is fair to the hard-pressed taxpayers in my constituency that their council tax has been frozen, not least because the Government have given us more than £7 million to enable that to happen. That funding was opposed by the Labour opposition.
Brandon Lewis
My hon. Friend makes a good point. It is good to see councils across the country freezing council tax and moving away from the situation that we had under the last Government, when it roughly doubled.
Andrew Percy (Brigg and Goole) (Con)
On the subject of how councils spend their money, North Lincolnshire council, which has been Conservative-run since 2011, has frozen its council tax for four years despite the funding cuts and despite having less per head than other councils. It has reversed the previous Labour council’s cuts to youth services and increased spending on and the building of new libraries. It is also replacing damaged and leaking classrooms, which the previous Labour council did not do. It has managed to do all that without having to place any extra burdens on council tax payers. This can be done if councils are prepared to show true leadership by cutting the people at the top rather than the services at the bottom.
Brandon Lewis
My hon. Friend makes a good point. The leader of that council is Liz Redfern, and it is a great example of a well run council. It is showing that we can deliver more for less. Good councils across the country are changing the way in which they deliver services by doing exactly the kind of work that my hon. Friend has outlined.
Mr Jim Cunningham (Coventry South) (Lab)
We cannot always place the burden on local authorities. In Coventry, for example, the cumulative effect will be a cut of 24%, involving 1,000 jobs. More important, children’s services and social services will be cut, and education services will be cut, which will affect school build. The Government are setting the clock back: when they impose a freeze, it is like a dam that will burst in three or four years’ time.
Brandon Lewis
If the hon. Gentleman looks at the statement we made before Christmas, he will see that that is not the case, because we have rolled the freeze grant into the base to help councils. I suggest that his council may want to listen to councils such as North Lincolnshire, which has shown that it can achieve improvements in services, even while spending less.
Sir Paul Beresford (Mole Valley) (Con)
I have been in the Minister’s position, albeit some time ago, and I wonder whether he agrees that some Members are engaging in bad cherry-picking by pointing out certain difficulties. They also point out that the system of calculation is complicated, but the reason it is complicated is that it uses a balance of factors that suits each individual local authority. It is therefore unfair to pick out the difficult cases without balancing them with the others.
Brandon Lewis
My hon. Friend, with his experience, makes a clear point, which highlights how some Labour Members sometimes like to forget the starting point from which they are working and what high spending power some of these authorities have.
Anne Marie Morris (Newton Abbot) (Con)
I congratulate the Government on changing the Bellwin formula at this point, which is relevant to the local government settlement. The percentage has gone from 85% to 100%, and the limit has now been relaxed from £1.7 million to £1.1 million. That is good, but my local authority tells me that although their pothole gangs have gone from 13 to 35, all planned work, other than drainage work, has had to be put on hold, so there is still a need for more.
Brandon Lewis
I thank my hon. Friend for that, and I know she is rightly fighting hard for her area. As the Prime Minister said today, we must make sure that we do all that we can to ensure that areas have everything they need in this situation, and I will discuss flooding in a few moments.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
On the Government’s own figures, Liverpool has the highest level of deprivation in the country, yet it has an entrepreneurial council that is working hard to back business and support jobs. In those circumstances, with the council showing so much initiative against a background of such adversity, why has Liverpool suffered the greatest cuts of all local authorities in the country?
Brandon Lewis
Actually, it has not. A council that has some of the greatest cuts is my own local authority in Great Yarmouth, which was left a black hole by the last Labour Government through the working neighbourhoods fund. I gently say to the hon. Lady that she might want to remind Mayor Anderson that Liverpool’s authority has £116 million in reserve, one of the highest spending powers in the country in the first place, a regional growth fund and a city deal. This Government are working with such local authorities.
John Hemming (Birmingham, Yardley) (LD)
I thank the Minister for meeting MPs from Birmingham to look at this issue, and I congratulate hon. Members generally on highlighting the difficulty of working out what a fair system is for allocating local government finance. The Government have focused on percentage reductions in spending power. Does the Minister agree that, after incentives, looking towards the reduction in percentage spending power, not absolute spending power, provides an equality of pain that gives us a way forward? It takes into account the fact that in areas like Greater Birmingham, where people work in Birmingham but live around it and require services from Birmingham but are not contributing towards—
Madam Deputy Speaker (Dawn Primarolo)
Order. Before the Minister replies, may I remind the House that 17 Members wish to participate in this debate? Interventions must be short, and I will start to interrupt them if they continue to be as long as they have been so far.
Brandon Lewis
Thank you, Madam Deputy Speaker. The hon. Gentleman made that point in the meeting we had. As I said to him, I will happily go through it in more detail over the next couple of months, meeting him and officials to look at some of the ideas he is talking about.
Brandon Lewis
I will make a bit of progress, bearing in mind what Madam Deputy Speaker said, and then take more interventions.
It is necessary for councils to continue finding sensible savings, to modernise services and to cut back on waste. Recent opinion polls have shown that that is achievable, and we have examples from around the country of councils doing just that. The level of satisfaction with councils is increasing compared with the situation in 2010, highlighting that even when savings are being made councils can maintain or improve services for residents.
This year’s settlement is fair. It is fair to north and south, rural and urban, metropolitan and shire. Let us be clear that next year councils will be armed with significant spending power, averaging £2,089 per dwelling; the top 10 most deprived councils in the country will average more than £3,000 per dwelling compared with a figure of about £1,900 per dwelling for the least deprived areas. We are protecting cities and those authorities facing a higher demand for services, despite what the Opposition suggest. As I say, the top 10% most deprived authorities will be more than £1,000 per household better off than the least deprived 10%. Places such as Newcastle receive £2,400 in spending power, about £900 more than places like Windsor and Maidenhead.
Simon Kirby (Brighton, Kemptown) (Con)
I do not agree with the Minister about Brighton and Hove’s council being satisfactory. The bonkers Green Brighton and Hove council is sitting on tens of millions of pounds of reserves, is spending millions of pounds on its leadership teams and is totally out of touch with residents. What can the Minister do about it?
Brandon Lewis
My hon. Friend has done a great deal by bringing this matter to the attention of Members and putting it on the record. What I say to councils, including the one in Brighton, is that they should do the right thing by their residents and freeze council tax to help hard-working people and families. We understand the pressures that all authorities face, and the division of funding demonstrates that we have tried to be fair.
John Healey (Wentworth and Dearne) (Lab)
How on earth can the Minister say that this settlement is fair when, three months ago, the Audit Commission, the local government expert, said that
“councils in the most deprived areas have seen substantially greater reductions in government funding as a share of revenue expenditure than those in less deprived areas”?
Is the Audit Commission wrong?
Brandon Lewis
As I said just a few moments ago, 10% of the most deprived areas of the country have an average spending power of £3,026 per household, compared with £1,900 for the least deprived 10% of areas. We must bear that starting point in mind. The most deprived areas have greater spending power. The average reduction in spending power this year is just 2.9%, with no council being more than 6.9% worse off. This is the highest level of protection that we have been able to offer councils in three years.
Mark Pawsey (Rugby) (Con)
The Minister has spoken about councils being able to put a freeze on council tax for a further year. Does he not realise that many councils could see what was coming? It did not take a genius to see that the financial situation in 2010-11 would be difficult. Rugby borough council recognised that, and is now looking at a council tax cut for the coming year.
Brandon Lewis
Again, my hon. Friend gives a good example, to which I will be referring in just a moment. Good councils have planned for this and worked for their residents. Not only are they able to freeze the council tax, but in some cases, councils such as Rugby have done the excellent thing and cut council tax.
Jack Dromey (Birmingham, Erdington) (Lab)
Birmingham has cut £300 million from back-office services, but is still reeling from the biggest cuts in local government history. It is losing 23% of its spending power, while Wokingham is gaining 1%. How can it be right that the 10 most deprived areas are hit 10 times harder than the 10 least deprived areas? How can that be fair?
Brandon Lewis
The 10% most deprived areas in the country and the areas with the most need have a higher spending power in the first place and get a bigger Government grant.
Richard Burden (Birmingham, Northfield) (Lab)
On this issue of spending power, may I take the Minister back to the first and second answers that he gave and see how he puts them together? My hon. Friend the Member for Birmingham, Erdington (Jack Dromey) talked about the reduction in spending power in a deprived area such as Birmingham. The Minister said, yes, but it has a higher spending power in the first place. My hon. Friend the Member for Easington (Grahame M. Morris) then said that the reason—
Richard Burden
The Minister said that the reason was that such areas have higher needs. If that is the case, let us go back to the same question: why do the most deprived areas with the highest needs get the biggest reductions?
Brandon Lewis
It is best to refer the hon. Gentleman to the answer I gave a few moments ago.
In response to the question about flooding asked by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), let me say that we are currently experiencing the wettest winter for 250 years, and that has an impact on local authorities’ finances. Many are working tirelessly for the safety of their communities. The Government have made it clear that they are committed to supporting them unequivocally. The severe flooding and storms have affected rural and urban, town and country alike from Great Yarmouth to Dawlish.
Sixty-two local authorities have thus far indicated that they will apply under the Bellwin scheme for financial assistance. The grant reimburses local authorities for the cost of their immediate actions to safeguard life and property. We have enhanced the terms of the Bellwin scheme in response to the most recent severe weather events. The floor has been lowered so that more councils can apply, which will be of particular benefit to the unitary and county authorities. We estimate that that could be worth an extra £15 million to those councils, and we will be paying 100% above the threshold as opposed to the previous 85%. For the longer term, I am committed, along with my colleagues across Whitehall, to undertake a review of the Bellwin scheme to assess what changes may be needed in the light of more frequent and challenging weather events. Members will no doubt already have noted that we have provided a £7 million severe weather recovery fund for those areas affected before and over Christmas.
We have also listened to the wider concerns—I note the comments that have been made in interventions already this afternoon—of colleagues in rural areas about the extra challenges their local authorities might face in achieving service delivery efficiencies. We are topping up the rural services delivery funding by an extra £3 million this year, including the extra £2 million announced today, so it is now worth £11.5 million, which is a further boost to the 95 authorities that will benefit this year.
Stephen Gilbert (St Austell and Newquay) (LD)
Does the Minister not recognise, however, that that is less than the cost of employing an officer to work out what the missing money between the rural and urban split would be? Three million quid divided by 95 local authorities is about 30 grand each.
Brandon Lewis
The difference between the urban and rural authorities is between 13% and 10% when it comes to spending power, depending on whether we are looking at the counties or the districts. We will be working with the Department for Environment, Food and Rural Affairs over the next few months to do some research on the difference in the cost of delivering services, which is raised regularly by Members from rural constituencies, and get to the bottom of the issue.
Andrew George (St Ives) (LD)
No doubt the Minister has studied the case made by the Rural Fair Share campaign and will be aware that Cornwall, for example, is not only rural, but among the most deprived areas of the country. Does he accept the principle that there is a comparative unfairness between urban and rural local authorities? Even if he cannot address the issue now, does he accept that the Government should address it in time?
Brandon Lewis
As I have said, the difference in spending power between urban and rural areas is between 13% and 10%—unless we are talking about a fire authority, in which case it is plus 3 for rural areas—so there is definitely a gap between the two. The work that DEFRA will do will look at differences in the costs in rural and urban areas.
Bill Esterson (Sefton Central) (Lab)
On fairness, the Minister earlier compared Newcastle and Windsor. Is he aware that Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy, has said:
‘When Government ministers compare such different councils as affluent Windsor and metropolitan Newcastle in an attempt to justify the “fairness” of the settlement it only serves to highlight how out of touch this process has become’?
Brandon Lewis
I am sorry if the hon. Gentleman feels that way about his hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who used that very comparison himself.
Dr Sarah Wollaston (Totnes) (Con)
To return to flooding, can the Minister confirm whether he will be making an application to the solidarity fund? I know that the threshold is high, but if it is taken on a regional basis that would be a really helpful source of additional funding for the south-west.
Brandon Lewis
My hon. Friend tempts me away from the local government finance settlement. The Government look at such things, but the fund currently has a threshold of about £3.7 billion, and the Government would have to pay back the majority of what we got because of the way the mechanism works.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
Further to the point made by the hon. Member for St Ives (Andrew George), will the Minister give us a guarantee that in the longer term he will grapple with the issue of funding for rural areas? Shropshire is the largest land-locked county in England, and providing services in such large areas inextricably costs more.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
Fortunately, in Staffordshire the Trent has not flooded, but we are facing cuts across the board—to the police, youth services, disability services and now libraries. In Newcastle-under-Lyme the actual cash cut has been 13.6%, but under total revenue spending power it magically becomes just 4.4%. Which figure is correct?
Brandon Lewis
I suggest that the hon. Gentleman should look at spending power, which is what the Local Government Association prefers to use, because it outlines the amount of money and the way local councils have influence and control. It is the entire spend that a local authority has; it does not just single out one small part of its funding. That is an important change in how local government finance has worked, as we are now moving to a system in which more and more of the money is in the entire control of local authorities with their own autonomy.
Brandon Lewis
I will give way to the Chair of the Communities and Local Government Committee before making some progress.
Mr Betts
I draw the Minister’s attention to what he told the Committee on 27 January. He said that the system is changing from one based on allocation according to need, which now will be reflected merely in the base business line rate in 2013-14. Basically, the Government will distribute grant according to local authorities’ ability to raise their own resources. Is that not a fundamental change?
Brandon Lewis
It is a total change away from the begging bowl system to a reward-and-incentive-based system for local authorities.
Mr Adrian Sanders (Torbay) (LD)
Does not this debate highlight what these debates have highlighted year after year—the lack of transparency in being able to judge one side against the other? Every council has had to deal with cuts; some have dealt with them well and some have not. How can voters judge which is which?
Brandon Lewis
In my experience, voters are pretty good judges of what is a good council as opposed to what is a bad council. We have already heard examples of councils that are doing really good work in transforming the way in which they deliver services and work together. I will come to that specifically in a moment.
We are continuing to encourage councils to grow their own economies. Last year’s transformation challenge award incentivised councils to rethink how they go about their business and to transform fundamentally the structure of their local services. Eighteen areas received a share of £7 million to jump-start innovative projects. Following this success, we will continue with the transformation challenge this year, and I will announce the terms and details shortly.
The expertise that councils have shared with other councils and the expertise being shared through the community budget pilots and the transformation network highlight the fact that this is the right approach. Authorities such as Staffordshire Moorlands and High Peak are showing that they can save about 18% by sharing management and working in a different way. Likewise, South Holland, Breckland and other councils around the country are working more innovatively.
Julian Smith (Skipton and Ripon) (Con)
Does the Minister agree that the Government’s £600 million-plus investment in rural broadband is another route for councils to make significant efficiencies?
Brandon Lewis
My hon. Friend makes a good point. The transformation of how we communicate, particularly through broadband, makes it possible to do many more things more efficiently and effectively, and it will no doubt continue to change how we deliver services and are able to work together across authorities.
The efficiency support grant has further incentivised transformation. The councils facing the largest spending reductions, many of which were in that position because they were abandoned by Labour’s reduction in the working neighbourhoods fund and left with a black hole in 2010, are now being given a leg-up towards making these savings through the transitional grant. I must declare my interest, as Great Yarmouth is one of the authorities that Labour left stranded. Authorities receiving the grant are protected by our safety net, which is bigger and stronger than last year. Despite some areas choosing to play politics with this—I am disappointed that Labour-run Great Yarmouth borough council refuses to follow the lead of other councils, sometimes even cross-party—councils such as Hastings and Pendle are doing some really good work on transforming things. Areas such as High Peak and Staffordshire Moorlands are working cross-party to share management and show the way to savings of about 18%. They are showing the way forward, and I hope that others will follow. Those in receipt of funding are making progress with their efficiencies, with many going a long way towards that, including many Labour-led areas. There is, however, more to do.
Hazel Blears (Salford and Eccles) (Lab)
I agree that transformation, integration and doing things differently is one way of mitigating the impact of the cuts. However, over the past few years my local authority in Salford has already cut our adult social care budget by £21 million. We were the last local authority in Greater Manchester to have to retreat to the position of providing support only to people with serious and critical needs. That means that 1,000 people in Salford will no longer receive support and care from the local authority. Those are real families in great distress, and the Minister must at least take account of that.
Brandon Lewis
I would be happy to meet the right hon. Lady and other Members from Salford if that would help. In a moment, I will touch on the better care fund, because we do need to look at how we change, reform and transform the delivery of adult social services, particularly social care. That is one of the things that my Department and the Department of Health are working on. I am working closely with the Minister of State, Department of Health, my hon. Friend the Member for North Norfolk (Norman Lamb), to deliver for local authorities.
We want to go further with the efficiency support grant. The Government do not want to continue as we have had to do, year after year, in patching up problems left from the Labour legacy. We have listened to authorities and to Members—not only me, before I was in post, but those such as my hon. Friends the Members for Hastings and Rye (Amber Rudd) and for Pendle (Andrew Stephenson)—about dealing with this issue once and for all and finding a permanent fix. Therefore, for councils that are on track with their efficiency plans and are delivering on the second year of their business plans, which we will review later this year, the grant will be rolled into their settlement in 2015-16. This a massive opportunity—a big reward—that will go a long way to filling, once and for all, the black hole in which seven authorities were left by Labour.
Andrew Gwynne (Denton and Reddish) (Lab)
May I ask the Minister whether his Department has done any kind of research into the long-term financial viability of local authorities? We already know that some are nearing the cliff edge, so what assessment has his Department made and what will he do to make sure that they do not go bankrupt?
Brandon Lewis
I refer the hon. Gentleman to the work showing not only that local authorities are coping well, but that good ones are improving front-line services.
Mr Burrowes
My hon. Friend mentioned the legacy from Labour. He will know, not least from Great Yarmouth, that damping is an issue for Enfield. Damping poses a structural challenge for places such as Enfield, with unmet need that is embedded year after year, and it does not reflect the growing population and deprivation issues.
Brandon Lewis
I thank my hon. Friend for raising the important issue of damping. I know that hon. Members have differing views about it, but it means that we can have stability in the baseline. It also recognises need as we move towards a new system, the business rates retention scheme, which I will turn to in a few moments.
Councils can become masters of their own destiny in other ways. The new homes bonus rewards councils that have increased the local housing supply, helping them to meet the needs of a growing community. In 2014-15, the new homes bonus will be worth £916 million, which is money for councils to spend as they see fit. Those authorities that have had an increase in their funding—Members have mentioned some of them—have had that increase because they have done the right thing: they have built more houses, and they have got more money for doing so.
The business rates retention scheme has revolutionised the potential to grow local economies, and has given councils a hand in their success. Under the previous Government, councils did not get to see that money—£11 billion in business rates—that they can now retain. Councils sit on a total of £230 billion of assets, and we must do more to turn those assets into better services for local people.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The Minister has talked about giving councils greater control over their spending, which has been reduced hugely—for example, Newcastle has lost £100 million—and about the new homes bonus, which is top-sliced from councils’ money and then controlled by this Government. How does he reconcile the Government’s apparent liberating of councils with their control of councils’ money?
Brandon Lewis
As we have said before, the Government are moving to a different system, in which councils are incentivised for doing things. The new homes bonus is a good example: if they build houses, they will get more money. Councils that need more support with creating or changing to cutting-edge services will now be able to use up to £200 million from asset sales to pay the one-off costs of service transformation.
The autumn statement protected local authorities from further cuts to services by setting out a two-year settlement, so allowing councils to plan for the longer term and to have stability in the services they provide to taxpayers. This year, we are publishing illustrative figures for 2015-16 to enable councils to do that.
As was announced in the spending round, £3.8 billion will become available from the better care fund in 2015-16. That touches on a point made by the right hon. Member for Salford and Eccles (Hazel Blears). The better care fund is a real opportunity for local authorities. It will give our civic leaders a once-in-a-lifetime opportunity not only to encourage better working between their local NHS and social care services but, importantly, to change for the better the lives of the most vulnerable people in our communities. Such a stable platform for forward planning, which is part of our long-term economic plan, will provide councils with the scope to merge back offices, to tackle fraud and to save £2 billion. Improving council tax collection will help to bring in the outstanding total of £2.4 billion in uncollected council tax. Our proposals put councils in charge of their finances and, for the first time in the history of local government finance, give them a direct stake in the success of the local economy.
We recognise the crucial role that councils can play in helping with the cost of living. We have offered councils support so that they can freeze council tax bills, despite the fact that those bills doubled under the previous Government. Since 2010, council tax bills have fallen by an average of 10% in real terms. The total freeze funding up to 2015-16 is £5.2 billion. That is a serious commitment by the Government to help hard-working families. Over the lifetime of this Parliament, the average band D taxpayer could save up to £1,100 thanks to our council tax freeze. The Chancellor has agreed, as he has in previous years, to put the next two years of funding into the baseline. That eliminates any risk of a cliff edge and offers the maximum possible certainty to councils.
Everyone in this House should expect councils to do their bit for hard-working families. They must recognise that they have a duty to take up the freeze offer. Councils that do not accept the freeze and instead want to raise bills by 2% or more may do so, but only by holding a binding referendum. We believe that that strikes the right balance between direct and representative democracy. I say to all councils, take the freeze. If they do not do so, but want to avoid a referendum, the increase will benefit them to the tune of just 0.9%. My message to councillors who are considering that is to go back and push their officers to deliver more for their residents. We have given local electorates the power to veto excessive rises through a referendum. Councils should trust the people if they are confident that they have a case for putting up taxes.
Charles Hendry (Wealden) (Con)
My hon. Friend has been very generous in giving way. Will he look again at the threshold for referendums for fire services, particularly small ones such as East Sussex? If they want to put their precepts up by £3 a year, which is less than 1p a week, it would raise £900,000, but doing so would require a referendum that would cost up to £750,000. That does not make sense and I ask him to look at it again.
Brandon Lewis
I thank my hon. Friend for that question. Local authority and fire authority treasurers often make that point. They say that they do not want to accept the freeze, but they want to build up their base. However, if they win a referendum, they get that in their base for ever, so I simply do not buy that argument. To answer my hon. Friend directly, last year we had a differential for the lowest charging authorities. We look at that on an annual basis. Although we are not doing it this year, we do not rule out doing it in future. With regard to referendums, there is a cost-saving opportunity for authorities this year, because we are allowing council tax referendums to be held on the same day as the European elections, which is 22 May.
So far, 161 councils have publicly announced that they intend to ease the monthly bills burden for families. As my hon. Friend the Member for Rugby (Mark Pawsey) mentioned, some authorities, such as Rugby, Croydon and Kensington and Chelsea, are even in a position to offer residents a one-off council tax rebate, so successful have they been in making savings. I expect many more councils to sign up to the freeze to make a difference to the cost of living for hard-working people and to demonstrate that locally elected leaders make the right choices for their electorate. I encourage councils to make the right choice and to offer a freeze for the fourth year.
Our do-it-yourself, reward-based mantra is a stark contrast to the old begging-bowl mentality. A substantial amount of money is available to local government in 2014-15. It is a bigger budget than the NHS and defence budgets. This settlement offers councils further freedoms, flexibilities and incentives to build more homes; to create more local jobs; to boost business and enterprise; and, ultimately, to provide more and better first-class services for their local residents.