Local Government Finance Bill (Seventh sitting)

Debate between Gareth Thomas and David Mackintosh

Thursday 9th February 2017 Public Bill Committees

[David Mackintosh (Northampton South) (Con)]

Will the hon. Gentleman give way?

[Mr Thomas]

At last. Let us hear from another enthusiast for this proposal.

[David Mackintosh]

As someone who has worked at granting discretionary rate relief, I ask the hon. Gentleman whether he recognise, that to do this it is necessary in two-tier areas to work across both authorities? Therefore, if the billing authority wants to do it, it will of course talk to the other authority involved.

[Mr Thomas]

I welcome the hon. Gentleman’s intervention, but what surprises me is that he did not explain why, having so enthusiastically backed the powers in amendments 48 and 49 when the Select Committee considered the report, he now seems hesitant about following that logic. I take his point that the best local authorities will want to consult each other, but amendment 30 is intended to deal with authorities that were not so respectful of their neighbouring areas, or the economic impact on the neighbouring areas’ residents. The amendment would lock such consultation into law.

It is interesting that apparently the hon. Members for Northampton South and for Thirsk and Malton, and other members of the Select Committee, did not come up on their own with the idea of an ability to vary the multiplier. They received substantial evidence from councils up and down the land about the power. The Local Government Association, the District Councils’ Network and the County Councils Network advocated it. Indeed, the Select Committee noted that its predecessor Committee recommended a similar provision.

On that basis, I suggest that my hon. Friend the Member for Oldham West and Royton was entirely right to table all three amendments. I understand, in the light of Surrey County Council’s decision, that there may not be enthusiasm for amendment 30, but I should be interested to hear why the Minister is rejecting the advice of the Select Committee on amendments 48 and 49.

Local Government Finance Bill (Third sitting)

Debate between Gareth Thomas and David Mackintosh

Thursday 2nd February 2017 Public Bill Committees

[Mr Thomas]

My hon. Friend makes a good point. I hope that the Minister is beginning slowly to get the concern of hon. Members, reflecting the concerns of local council leaders and councillors, about how the redistribution arrangements will work in practice.

I will end this point with one last example, which may be particularly interesting to one member of the Committee. That is the comparison between the 10th most deprived council, Tower Hamlets, and South Northamptonshire Council, the 10th least deprived.

[David Mackintosh (Northampton South) (Con)]

rose—

[Mr Thomas]

I will give way in a moment. Tower Hamlets had an actual revenue spending power of £342.93 million in 2011. That is projected to drop to £272.39 million in 2019. That is a £70 million drop in spending power, or 25.9%. Compare that with South Northamptonshire Council, which I understand is quite close to the hon. Gentleman’s constituency, so I will happily give way to him in a second.

That council had an income of £10.8 million revenue spending power in 2011. That is projected to drop to £9.9 million by 2019. That is a drop of under £1 million in actual revenue spending power; a drop of 9.19%. I would not want to understate the significance of that for local services, of course, but the comparison with Tower Hamlets is of a 25.9% drop as opposed to a 9.19% drop. That is not fair and, if the current redistribution arrangements continue exactly as they are, I suspect that the Tower Hamlets, South Northamptonshire example will continue to be grossly distorted.

[David Mackintosh]

I am grateful that the hon. Gentleman recognises that the Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for South Northamptonshire (Andrea Leadsom), is not on the Committee. As a former leader of Northampton Borough Council, who has worked very closely with South Northamptonshire Council, I ask the hon. Gentleman whether he recognises that this measure is supported by lots of local authorities.

[Mr Thomas]

As I have previously alluded to, I recognise that there are many, many councils up and down the land that are desperate to see Whitehall, especially under the current incumbents, draw back from trying to influence what they do at local level. Of course, there will be commitment and support for the principle of 100% business rate devolution. I do not know whether the hon. Gentleman is welcome at South Northamptonshire Council, although I suspect he is. If he were to sit down and talk to the treasurer in detail, he might find that the treasurer acknowledges that there is a genuine and serious concern about how redistribution will work in practice.

Therefore, there is a real concern, given what has happened over the past six years, while the Conservative party has been in power, about the impact on revenue spending power and the redistribution that appears to have happened away from the poorest areas of the country, relatively speaking, to the richer areas. That is of profound concern for many councils.

Local Government Finance Bill (Second sitting)

Debate between Gareth Thomas and David Mackintosh

Tuesday 31st January 2017 Public Bill Committees

[Mr Thomas]

Q What is wrong with the Bill, in your view? Obviously, the Minister thinks it is wonderful, but no doubt you will be slightly sceptical about whether that viewpoint is completely accurate.

James Lowman: From a business point of view, we support the Bill. Our concerns are about the notion of giving councils the opportunity to reduce the multiplier. We support that, but how realistic is it that the powers will be used and applied? That is partly because of issues with local government funding that you will know about much better than I do.

From our perspective, the Government have already introduced powers for local authorities to give discretionary rate relief for whatever reason they like. That can be used to support high streets, or particular sectors or areas. That is very under-used—it is being used by about 12% of councils at the moment—which makes us sceptical about the likelihood of councils using the powers in the Bill to reduce the business rates burden, given the pressures we all know they are under. Against that, while there are many good checks and balances against the introduction of increases in business rates and levies, there is a concern to ensure that powers in the Bill are not pushed as far as they can to try to increase business rates revenues. That would be our summary position.

Professor Tony Travers: In that the Bill carries on the work started by 50% business rate retention back in 2011—and even going back to the previous Labour Government, when they had the local authority business growth incentive scheme—those things are both rational in moving towards a system where local authorities at least have some chance of retaining the uplift in any growth in the tax base they generate. That makes sense, in my view. What is wrong is what is often wrong in UK—or, in this case, English—systems of local government finance. Although this looks like a move to a system where councils are completely dependent on council tax and business rates, in truth there are still many ways in which the Government of the day can intervene, making the actual business of running local government not as predictable as would be the case if it was a purely locally funded system of local government finance.

[David Mackintosh (Northampton South) (Con)]

Q This is a question for Mr Lowman. On Second Reading I agreed with the point made by your organisation that there is a potential for local authorities to try to increase business rate revenues by signing off larger planning applications for developments at the cost of small businesses. How can that be mitigated?

James Lowman: That is a concern regarding having a greater incentive to bring in large chunks of business rates through large developments, which was touched on in the previous session. There is a danger in our sector if a big out-of-town supermarket application is granted because of the effect it will have on the high street, other surrounding neighbourhood retailers and so on. In the grocery market, that is less common than it was a few years ago. None the less, it is true that out-of-town developments can harm high streets. The temptation to grant those applications concerns us because that may lead to a large slug of business rates coming up in the first instance but, over time, business rates income will diminish as those town centre and high street businesses come under pressure—of course, there are other effects.

The most effective way of mitigating that would be to have a long reset period. We have suggested 10 years, but some people have suggested longer. The reason is that the impact of those big developments can be felt more fully across that longer reset period. If you have a short reset period, you may see the upside of the development without the downside of the closures and other consequences. That long reset period would be one way of reducing that temptation for authorities.