Local Government Finance Bill

David Ward Excerpts

Wednesday 18th January 2012 Commons Chamber

[Mr Jones]

I think the hon. Lady represents Dorset, and there is a big difference between Dorset and parts of County Durham. Even though there are some very beautiful parts of County Durham, I am sure that Dorset’s economic activity shows it to be far more affluent than parts of County Durham. I support local decisions being taken at a local level, but I do not support a system in which her constituents in wealthier areas will gain at the expense of constituencies such as mine that need support for economic development.

What we heard last week on Second Reading from Government Members was absolutely disgraceful. Conservative Member after Conservative Member referred to local councillors not being interested in economic development. I have to say that I have never yet met one who does not want to increase the economic vibrancy of their area. They put a lot of effort into doing that, and such comments show again the prejudice of Government Members.

The changes to council tax benefit will be a nightmare for councils not just because of the localisation of the system but because of its top-slicing—

[Mr David Ward (Bradford East) (LD)]

Speak to the amendments, will you?

[Mr Jones]

I am sorry, but I think you are chairing the Committee, Mr Amess, not a Liberal Democrat Member who usually has very little to say, and frankly when he does it is not very interesting.

I am talking about the time scale of what is being introduced. We will have to work out the methodology of how the funds are to be distributed. We hear, for example, that pensioners are not going to be included, which will have an effect on some poorer councils, such as the eastern part of County Durham, with large ageing populations. The time scale for the system’s introduction is very limited, and there is uncertainty about exactly how it will happen. Instead, the Bill should have included the schedules, procedures, mechanisms for redistribution and so on.

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[Mr Jones]

Exactly. Not for the first time, some of those chickens are coming home to roost. Hopefully, we will have fewer Liberal Democrat “Focus” leaflets claiming credit for everything that goes right and criticising everything else that the previous Government did. Some of those northern councils had Liberal Democrats, but thankfully, in places such as Newcastle and Sheffield, the electorate have seen through them.

In conclusion, the timetable for the Bill needs to be rethought. As suggested by my hon. Friend the Member for Rhondda (Chris Bryant), if we can take witnesses at this stage, we should consider doing so, because otherwise the same will happen as has happened with a lot of Bills this Session: the Bill will be rushed through here only to be held up in the other place, where the ladies and gentlemen will give it the proper scrutiny that it deserves.

[Mr Ward]

I want to make just a few comments. I also consider it regrettable that the Committee stage is being taken here and not in one of the Committee Rooms. The quality of debate might have been better in that environment.

I am sympathetic to the amendments on deferment. I want to discuss that point in particular. After many, many years of seeking the change for which most in the House have called, we have before us a radical and important shift in the relationship between local government and central Government, but we face a potentially enormous change of not just a financial nature but a constitutional nature. One of the concerns that I guess we all share is about the unknown consequences of the redistributional impact.

Yes, there are tariffs and top-ups, and we welcome the application of the retail prices index to the baselines for business rates and local authority funding—that is welcome—but actually local government finance is not too complex. Yes, the formula and weightings are complex. We all know about the complexities of what goes into the computer and the figures that come out, but its purpose at the moment is actually pretty simple: to redistribute funds to authorities on the basis of need. That is pretty simple. But we are moving from that system to a new system.

We all welcome, I think, the principle behind localisation. The trouble is that, with many of the things we are facing, the easier it is to accept something in principle, the more difficult it is to challenge the consequences. Because we are talking about such a strong principle, which many of us hold, we are willing to accept some of the consequences, or potential consequences, when we are not fully aware of what they will be. There may or may not be a change if we move from a system based on the allocation of funds by need to one based on allocation by growth in business rates. However one thing we do know is that if things go wrong, it must, by definition, be one that, with the total pot—

[Graham Stringer]

Will the hon. Gentleman give way?

[Mr Ward]

Let me just finish; I shall not be much longer.

I understand all the measures that are built in, but if the total pot is the same and there is a redistribution, it must be to the disadvantage of the beneficiary authorities that receive most of the formula grant. That is a concern, and although it might not affect those authorities for the first few years, because of the baseline protection, the unknown consequences—

[Andrew Gwynne]

Will the hon. Gentleman give way on that point?

[Mr Ward]

Let me just get through this.

The Bill is not too complex. One of the arguments against having witnesses—it would have been useful to do that—is that we will get the opinions of only those witnesses. The truth is that nobody knows what the outcome of this will be, because it is dependent on the growth in business rates, while the strategy of rebalancing the economy will have implications for different parts of the national economy.

[John Healey]

On a point of order, Mr Amess. Any written evidence submitted to a Public Bill Committee, and not just the oral evidence taken in its opening sittings, will be circulated to all members of that Committee. May we have your guidance, and then the reassurance of the Minister or the House as appropriate, that any written evidence submitted to this Committee of the whole House will be circulated to all Members, who may all have an interest in participating?

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[The Temporary Chair]

I will reflect on the point that the right hon. Gentleman has made, and obviously those on the Treasury Bench have heard it. What is proposed might not be possible because of time constraints, but I will certainly reflect on it.

[Mr Ward]

Just to conclude—

[Mr Kevan Jones]

Good.

[Mr Ward]

You and I are going to have to have words later.

[The Temporary Chair]

Order. I would remind all hon. Members that this is the mother of all Parliaments, and we conduct ourselves in a civilised way. I am aware that something has been happening that is outside what is normal debate, but I would ask hon. Members please to calm down.

[Mr Ward]

The issue that I want the Minister to consider is not so much to do with the resets—whether they should be every 10 years or every three years—because the reset implies that something needs changing, and the truth is that we do not know whether anything will. What is much more important, as we venture into the unknown, is how quickly everything is reviewed. That might be after one year, or two years, and not necessarily the three years proposed by the amendment. We need to have clear evidence as soon as possible about the impact and the consequences of what is proposed in the Bill.

[Heidi Alexander (Lewisham East) (Lab)]

I am grateful for the opportunity to speak in this debate, Mr Amess. I just want to pick up on the point made by the hon. Member for Bradford East (Mr Ward) about the principle of this Bill. I think that he said that most people in the Committee agree with it. I agree with the principle that local authorities should do all they can to promote economic prosperity and growth in their areas. I am not sure that I necessarily agree with the principle of retention and localisation of business rates, although I will not repeat my concerns about that point, which I expressed on Second Reading last week.

I support the amendment tabled by my right hon. and hon. Friends on the Front Bench, because it is overly optimistic, shall we say, of the Government to think that they will be able to get this legislation through and that councils will be able to put the requisite systems in place to introduce the new system of finance in 2013. If we are to have this new system, the commencement date should be moved back, to 2014.

Last week on Second Reading we heard a lot about how the issue of local government finance had been much debated and how the previous Government commissioned the Lyons review. We had an historical “tour de force”, going through the history of local government finance, even referring to the work of Layfield in the 1970s. Government Members seemed to suggest that there was a case for just getting on and doing something to localise business rate retention, but doing something for the sake of it is not the same as doing something because it is the right thing to do and because it will work. The complexity of the new scheme that is being proposed will not make the system of local government finance any more transparent to local councils and councillors, or even the general public, because what we have before us is a system with a whole range of baselines, tariffs, top-ups, levies, set-asides and safety net payments.

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[Mr Betts]

It could be; we are not sure where that funding is coming from. In future, a whole variety of things, such as police grant, could be paid for out of set-aside. Things that Government would have paid for through another source could be paid for out of set-aside, saving the Treasury money. We do not know, because the Bill does not contain the detail. All that we can say is that there will be no power at local level, or among local government collectively, to decide such things. Will there be any power in the Chamber to decide such things, or will it all be up to Ministers?

[Mr Ward]

The hon. Gentleman makes a crucial point. We discussed earlier the uncertainty around incentivisation—we do not know what that will lead to—but we can completely remove the uncertainty around the levy account and the safety nets in the central share if the Minister makes a clear statement about what they will be used for.

[Mr Betts]

We could, but I am not sure that Ministers will be able to give such an assurance. I say to the hon. Gentleman that it is his Government who are taking these measures, so he may have more influence over Ministers than those of us on the Opposition Benches do.