Local Government Finance

Debate between Brandon Lewis and Graham Stuart

Wednesday 12th February 2014 Commons Chamber

[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.

Local Government Finance

Debate between Brandon Lewis and Graham Stuart

Wednesday 18th December 2013 Commons Chamber

[Brandon Lewis]

I would suggest that the hon. Lady use her powers of persuasion to encourage Birmingham city council to do the right thing and, instead of playing political games with its local taxpayers, be more efficient with its back office, and look at how to use its reserves to invest for the future.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

People living in rural areas earn less on average than people living in urban areas, pay higher council tax and get fewer services, which are more expensive to deliver, yet there is a 50% rural premium or penalty, with 50% more going to urban areas than rural ones. We welcome the rolling of this grant into the general fund, but it will do nothing to close the gap between urban and rural, which cannot be defended.

Funding for Local Authorities

Debate between Brandon Lewis and Graham Stuart

Thursday 10th October 2013 Commons Chamber

[Brandon Lewis]

My hon. Friend makes a reasonable point. I will touch on how these things come together and the work we are doing to deal with that.

The hon. Member for North Devon (Sir Nick Harvey) made a passionate and strong speech about sparsity and disparity and how they need to be dealt with. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) made a powerful point about the chief executive of the Local Government Association, who is clearly disposed towards higher council tax charges for residents, which I think all of us—those of us on the Conservative Benches, at least—want to move away from while we keep frozen and low council tax. In some areas, good Conservative councils are even cutting council tax for their hard-working residents. I noted my hon. Friend’s comment about asset sales. I will look at that, and if he will bear with me I will get back to him on that specific issue.

My hon. Friend was absolutely right to mention incentives to pool and work together. We have put incentives in place and I will touch on them in a moment. Councils such as High Peak, Staffordshire Moorlands, Breckland and South Holland have just this week benefitted from those incentives and the money we announced.

My hon. Friend the Member for Beverley and Holderness continues to make a strong case on this issue. He has pushed it with other Members and comes to see me regularly. I have no doubt that our conversations will continue as we approach the financial settlement period over the next few months.

My hon. Friend the Member for Worcester (Mr Walker) and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) highlighted the cost for rural areas, particularly with regard to transport. Members representing urban areas often mention issues to do with density and poverty and how they balance out. That issue has yet to be proven with regard to cost differences and we will continue to look at it.

I gently say to the hon. Member for Cambridge (Dr Huppert) that, if Cambridgeshire is so short of funding, he might want to ask how it could afford a huge pay-off and the rather interesting system it has used to reappoint the chief fire office of its fire authority. That happened in the past few weeks and it has raised a number of questions.

[Mr Graham Stuart]

Will the Minister touch specifically on the magic dust of 2012—the damping—and the fact that, instead of a being a transition mechanism, it turns out to be a deep freeze of an inequity?

[Brandon Lewis]

I am about to turn to some more general points and I will touch on the damping issue.

I want to be clear that behind all our thinking is that it is vital for councils to continue to play their part in tackling the budget deficit we inherited from the previous Government, making sensible savings and delivering value for money for the taxpayer, as many good councils are doing. We are providing direct financial incentives for councils to promote growth and jobs in their area. This year’s local government finance settlement set out how authorities can now directly retain £11 billion-worth of business rates and keep the growth from them instead of returning them to the Treasury.

More importantly, and perhaps more relevantly to this debate and the points made by hon. Members from all parties, in the current settlement we accepted, based on the available evidence, that rural areas are comparatively underfunded. We have therefore ensured that there is proper recognition of the additional costs of delivering services in rural areas. We adjusted the relative needs formula to reflect those costs. That was one of only three formula changes in the settlement.

Members have noted the changes, but I will reiterate them. We have increased the weight of super-sparse areas in the formula; doubled the sparsity weight for older people’s social care and district-level environmental protection and cultural services; reinstated the sparsity adjustment for the county level; and introduced a sparsity adjustment for fire and rescue. As a result, funding per head has been reduced by less in predominantly rural authorities than in predominantly urban authorities within all classes. There was a 4% reduction in the gap between 2012-13 and 2013-14. I know that some Members have an issue with how that is classified and I am happy to meet them to go through that when the figures for next year are confirmed.

We listened to the representations of rural authorities on the provisional settlement in the debate earlier this year. That is why we provided a further £8.5 million grant to help rural authorities with sparse populations.

Oral Answers to Questions

Debate between Brandon Lewis and Graham Stuart

Monday 8th July 2013 Commons Chamber

[Brandon Lewis]

The hon. Gentleman makes a good point. This is a very important step forward and a huge opportunity for people to see better care as well as better savings for local authorities. We will continue to work with local authorities and the team at the Department of Health to ensure that the integration is smooth and that we get the benefits experienced in, for example, the tri-borough, which has taken this on and saved hundreds of millions of pounds and, importantly, is giving its residents a better service and a better quality of life.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Following the spending review, is it not obvious that we need a fairer local government settlement? We must close the gap between urban and rural areas and redistribute central Government funding to rural areas, which have suffered for too long with higher costs and lower central Government support.

[Brandon Lewis]

I thank my hon. Friend for making that point. As Members will recall, in this year’s assessment we recognised sparsity and went further by making available just over £9 million more to cover it. I will continue to talk to the rural authorities group over the summer to ensure another clear and fair settlement when we get to 2014.

Local Government Finance (England)

Debate between Brandon Lewis and Graham Stuart

Wednesday 13th February 2013 Commons Chamber

[Brandon Lewis]

I thank that hon. Gentleman for his question, which gives me a chance to explain again why this came about. Because of the state in which Labour had left local government finance, 20 authorities faced a massive cliff edge. We introduced a transition grant which, during the last two years, allowed those authorities some leeway and enabled them to get into a position that would allow them to move forward. Seven are still heavily affected, including the authority in the hon. Gentleman’s constituency, as I know from an Adjournment debate that took place not long ago.

The efficiency support grant involves a two-year programme. As I have said, in year one councils will potentially receive 25% more than they were expecting from the provisional grants. In that first year, they will work with the Department to increase their efficiency across the board by means of, for instance, shared management and shared services, so that at the end of the two-year period they will no longer need the grant. We made the position very clear to the councils, and they have been sent information describing the kind of work that they need to do in order to receive year two money as a result of the efficiencies that they are achieving in year one.

In December we said councils were facing an average cut of about 1.7%. We now know the impact of the public health grant, however, because that figure has dropped to just 1.3%. People would expect us to say the settlement is even-handed—[Interruption]—and the mumbling from the Opposition Benches confirms that, but a report produced by this House concurs with our view. It says:

“Excluding London, northern regions have larger start-up funding assessments and revenue spending power per dwelling than their southern counterparts”

and

“the more deprived areas generally receive higher per dwelling allocations than less deprived areas”.

The heat maps we are publishing today back up the fact that this settlement is fair for all.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

It is hard to see the settlement as fair to all when there is a rural penalty, with 50% more per head going to support councils in urban areas than those in rural areas, where people on average earn less and have a higher council tax, and therefore have lower spending power. In the period up to 2020, we will need to move towards a more just settlement that genuinely reflects need, whether in the inner cities or rural areas.

[Brandon Lewis]

My hon. Friend makes his point as passionately as he and other colleagues did on Monday, and I know from the meetings I have had with him on this issue that he will continue to do so. I shall talk about rural funding shortly.

Local Government Finance (Rural Authorities)

Debate between Brandon Lewis and Graham Stuart

Monday 11th February 2013 Commons Chamber

[Brandon Lewis]

I thought that the hon. Gentleman had something to say that was different from what he had already said. Again, he avoided mentioning the £52 billion of cuts that his party had pledged to make. My point is that Government Members, including the Secretary of State, are standing up for the people whom we are elected to stand up for—the hard-working residents who will benefit from the council tax freeze that this Government are providing.

Let me say in the few moments that I have left that the thinking behind this local government financial settlement took into account ways in which councils can make progress in the years ahead, and that we believe it to be fair to both north and south and to both rural and urban communities. As others have pointed out, we have managed—although, I recognise, not to the extent that some would have liked—to reduce the gap between rural and urban. We have made adjustments to relative needs formulas to reflect the greater cost of providing services in rural areas. That is one of only three formula changes in the settlement. We have increased the weight of super-sparse areas in the formula, doubled the sparsity weight for older people’s social care, reinstated the sparsity adjustment for county-level environmental protective and cultural services, and introduced a sparsity adjustment for fire and rescue. As a result, funding per head is falling by less in predominantly rural authorities than in predominantly urban authorities, in all classes.

[Mr Graham Stuart]

Members on both sides of the House are concerned about the 2014-15 settlement and the position up to 2020. Can my hon. Friend assure us that Ministers will be willing to discuss next year’s settlement, and to ensure that we get the settlements right from then onwards?

[Brandon Lewis]

I can confirm that. I have had a few meetings with my hon. Friend, and he has—rightly—made a powerful case for people in rural areas. I can tell him that I shall be happy to continue to talk to Members from all parts of the country about next year’s settlement.

My hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) raised the position of West Somerset. I have visited West Somerset and met the council leader a number of times. I know my hon. Friend will agree that, given its critical mass—the area has just 35,000 residents—it must consider sharing management and services with other authorities.

There is much more to be said about this subject. I shall be happy to meet Members individually to discuss it with them, but I want to ensure that my hon. Friend the Member for Tiverton and Honiton has a couple of minutes in which to sum up the debate.

Newcastle upon Tyne City Council

Debate between Brandon Lewis and Graham Stuart

Tuesday 8th January 2013 Commons Chamber

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

I first join the right hon. Member for Newcastle upon Tyne East (Mr Brown) in congratulating the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing the debate and giving us the opportunity to go through some of the principles behind the Government’s work on the local government finance settlement. As the hon. Lady will know, there is currently a consultation process. This week—I think on Thursday—I will be meeting representatives from the councils of Newcastle to go through specific issues, and I will take on board their comments.

The proposals that my right hon. Friend the Secretary of State set out on 19 December are out for consultation. I want to be clear that we believe that it is vital that councils continue to play their part in tackling the inherited budget deficit by making sensible savings and delivering value for money for the taxpayer. The settlement recognises the responsibility of local government to find sensible savings and make better use of its resources, and it marks a new type of settlement for local government based on self-determination and financial independence. It is a move from the begging bowl to pride in locality, and it is the start of the biggest shake-up of local government finance in a generation.

As the Secretary of State said, we are shifting power from Whitehall directly to the town hall, and we are providing a direct financial incentive for councils to promote growth and jobs in their area. From April, authorities will directly retain nearly £11 billion of business rates instead of returning it to the Treasury, and they will be able to keep the growth on that share of business rates. Striving councils will benefit by doing the right thing by their communities. If they bring in jobs and businesses, they will be rewarded. That could be particularly opportune in the context of the hon. Lady’s comments about the investment in culture that she feels the council should maintain. I will come back to that in a moment, but I hope she wins that debate with the council.

Research suggests that allowing councils to keep a share of the business rates could generate an additional £10 billion for the national economy by 2020. Our reforms will enable about 70% of local authority income to be raised locally, compared with a little more than half under the current formula grant system. That is a giant step forward for localism.

The start-up funding assessment, which gives each council a share of the funding, will mean £26 billion being shared between councils across the country, with the smallest reductions being for the councils that are most reliant on Government funding. Recent analysis by the House of Commons Library states:

“For each of the expenditure/funding measures the more deprived areas generally receive higher per capita allocations than less deprived areas”

and percentage reductions are

“generally smaller for the most deprived and larger for the less deprived areas.”

It goes on to say that:

“The group of authorities more dependent on formula grant to finance their budget—generally the more deprived areas—is set the highest floor level, representing the smallest reduction.”

We have worked closely with local government in developing the rates retention scheme and listened to what councils have told us during the extensive consultation process last year. For example, we have reduced the amounts we are setting aside for the new homes bonus and academies funding, which in total means an additional £1.9 billion for local authorities up front in 2013-14.

We have put in place a safety-net arrangement to provide protection for councils that might be affected by the closure of a large local employer. We have set the safety net at the most generous level in the range consulted on, meaning that councils will be guaranteed 92.5% of their original baseline funding under the scheme. Local authorities told us that they wanted a stronger growth incentive and we were happy to respond. We have made the scheme more generous, ensuring that at least 25p in every pound of business rate growth will be retained locally. The settlement leaves councils with considerable spending power.

[Mr Graham Stuart]

We have heard an impassioned case on behalf of Newcastle but the settlement inherited from the previous Government was not only a toxic debt but a situation in which funding for local government is 50% higher in urban than rural areas, despite the fact that delivering so many services in rural areas is more expensive. The real injustice is the historic underfunding of rural areas and the danger that that could be held in place all the way to 2020. It is not so much about Newcastle, although the challenges are everywhere, but we are seeing real injustice in rural areas.

[Brandon Lewis]

I have already met a number of councils that have made that case about rural areas. The detrimental impact of damping on some of those areas has been made clear to us in the consultation so far and we are very aware of the issue. My hon. Friend makes a strong point with great passion.

A small number of authorities will require larger savings to be made, but our proposals indicate that no council will face a loss of more than 8.8% in its spending power thanks to a new efficiency support grant. I will declare an interest and return in a moment to the figures mentioned by the hon. Lady because authorities such as mine in Great Yarmouth are suffering thanks to the problems inherited from the previous Labour Government’s funding structure. As the name implies, councils must improve services to qualify for the efficiency support grant. It is unfair to expect, as currently happens, the rest of local government to subsidise other councils’ failure to embrace modernity or move forward to a more efficient delivery of services. The settlement is not about what councils can take but about helping them take the most from what they can make.

Predictably, the doom mongers have been consulting their Mayan calendars and issuing dire warnings about the end of the world as we know it and a billion pound black hole in local budgets. Concerns that the poorest councils or those in the north will suffer disproportionately are well wide of the mark, as made clear in the report by the House of Commons that I cited a moment ago. In fact, the spending power for places in the north compares well—in fact, favourably—with those in the south.

Oral Answers to Questions

Debate between Brandon Lewis and Graham Stuart

Monday 17th December 2012 Commons Chamber

[Brandon Lewis]

Yes, we are using the census figures.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Does the Minister accept that too many central initiatives do not reach rural areas, and that if we are to ensure that people in rural areas have access to services, we need to ensure that that is put right?

[Brandon Lewis]

My hon. Friend is right to highlight the fact that rural areas—I represent a rural area in Norfolk, as he knows—have different issues from metropolitan and urban areas. It is important that those local authorities have the flexibility and the powers, which they now have under the general power of competence, to make decisions about what is right for their local community, bearing in mind its make-up and style.

Static Caravans (VAT)

Debate between Brandon Lewis and Graham Stuart

Thursday 26th April 2012 Commons Chamber

[Mr Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to be on my feet again in the Chamber with an opportunity to talk about an issue that is so important to the people of east Yorkshire and coastal and rural communities around the land.

East Yorkshire is at the heart of the caravan industry. I have a major manufacturer, ABI, in the centre of Beverley, suppliers to the manufacturers scattered around my constituency and parks dotted down the Holderness coast. For us, static holiday homes are a big deal. The presence of so many Members, despite the fact that it is a Thursday evening, when Members are normally thinking of moving back to their constituencies, demonstrates the depth and breadth of concern about this issue, not least among Government Members.

[Brandon Lewis (Great Yarmouth) (Con)]

rose—

[Mr Stuart]

Before I give way to my hon. Friend, I should point out that I shall be the only person making a speech before the Minister responds, but because there has been so much interest in the debate, I shall give way to as many hon. Friends on both sides of the Chamber as I possibly can as we work together to persuade the Treasury to think again.

[Brandon Lewis]

I thank my hon. Friend for giving way and for outlining how generous he intends to be. He mentioned the depth and breadth of concern about this issue. In Great Yarmouth, the tourism industry is worth about £500 million, and an estimated 50% of our bed space is in static caravans. Over the years, they have come to have more in common with park homes than with mobile caravans. Does my hon. Friend agree that that might be a better way for them to be assessed?

[Mr Stuart]

My hon. Friend is absolutely right, and I shall address that point in my speech.

I ran a street surgery in Withernsea, a coastal town in my constituency, on Saturday. As I stood talking to people and handing out leaflets, perhaps as many as three out of 10 people said to me, “I’m not from round here, mate.” They were not staying in bed and breakfasts or hotels, because we have hardly any in the area; they were staying in static caravans. Two or three out of every 10 people going into Aldi, or into the bakery down the road, or spending money in the pubs were staying in static caravans. In addition to those directly employed in the manufacture of the caravans and in addition to the parks, however important they all are, the importance of visitors to the rural economy is immense. That is why there has been such a groundswell of feeling that this issue should be reconsidered.