Local Government Finance
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
The hon. Gentleman now seems very concerned about the burden of business rates on business. Why then, during the Local Government Finance Bill Committee, did he and his colleagues advocate allowing local authorities to increase the multiplier in an arbitrary fashion, thereby putting tax rates up for businesses?
Mr Thomas
I am glad the Minister got to his feet, because I was coming on to his performance yesterday in Committee. Given the deep and profound concerns about the business rates revaluation, it was a little surprising for the Secretary of State to send out his Minister to reject the idea that any change to business rates was necessary. His spokesperson was still being quoted yesterday as claiming that business concerns were just scaremongering.
In 2005, PricewaterhouseCoopers tracked the tax liabilities of Britain’s biggest companies and found that half of the total came from corporation tax, while just 11% came from business rates. Today, corporation tax has fallen to 19.7% of tax paid by the top 100 group of companies, while the figure for business rates is 21%. Moving away from taxing revenue and profits, and increasing the tax share on businesses more reliant on bricks and mortar is surely going in the wrong direction given the rise of the digital economy.
I welcome the Secretary of State’s decision to have a review of the support for small businesses hit hardest by the business rates revaluation. I look forward to him being able to instruct his Minister, and encourage his hon. Friends, to support the amendment we have tabled to the Local Government Finance Bill on Report, requiring a full review of business rates and their impact on local government finance before the Bill comes into effect.
Local Government Finance Bill (Tenth sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Chair
I had not been alerted to the fact that this matter was raised this morning. The Minister has heard what has been said, but I am afraid that it is not a matter for the Chair.
Clause 42
Commencement and short title
Question (this day) again proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship once again, Sir David. The clause makes standard provision in relation to the commencement of provisions in the Bill, as I explained in relation to amendments 52 and 54 before we broke. Subsection (1) sets out that the provisions relating to the telecommunications relief guidance about notices relating to non-domestic rates and Her Majesty’s Revenue and Customs expenditure for digital services will come into force on Royal Assent. Powers to make regulations in the Bill as well as the final standard provisions of the Bill will also come into force on Royal Assent.
Mr Thomas
One of the things that is missing from the Bill is any reference to local enterprise partnerships. The Minister may remember that before the former Chancellor, the right hon. Member for Tatton (Mr Osborne), was sacked for incompetence by the new Prime Minister, he made reference to 100% business rate devolution and, crucially, infrastructure supplements that require the consent or support of local enterprise partnerships, but there has been no mention of local enterprise partnerships in any of the clauses, or indeed in the Minister’s speeches. Will he set out why there appears to be a change in the involvement of LEPs?
Mr Jones
The hon. Gentleman raises an interesting point. I suppose it would have been more pertinent to our earlier deliberations in considering the Bill, when we were dealing directly with supplements that can be charged by directly elected Mayors and the consultation process that will be gone through with businesses. I do not want to dwell on that point, other than to say that we clearly set out how the matter will be considered. We consulted widely with the business community, including local enterprise partnerships. That is why we came to the conclusion and took the view that we did on how Mayors will have to consult with business if they wish to implement a business rate supplement for infrastructure.
In my response to amendments 52 and 54, I set out the reasons why the Bill commencement regulations should not be delayed until 2019. We have had several discussions on delegated powers. As I have explained, the Bill provides a framework to establish a new business rates retention system. Our approach allows us to continue to work with local government over coming months and years on the details of the reforms, which councils will welcome.
In line with the approach taken in the previous local government finance legislation, the Bill necessarily contains a number of delegated powers, as set out in the delegated powers memorandum, which describes each power’s purpose, justification and proposed procedure. The Bill takes a similar number of powers to the previous legislation. As I said at our previous sitting, the majority of those powers amend or replicate existing legislation, predominantly the Local Government Finance Act 1988 and the Business Rate Supplements Act 2009.
Where replicating existing powers, the Bill retains the procedure for each from previous legislation. Where the Bill creates new powers, the majority will provide for parliamentary procedure but, as is normal for this type of legislation, the Bill contains new powers that do not have a parliamentary procedure, such as the commencement regulations under this clause.
Mr Thomas
On the commencement proceedings, the Minister might remember that I asked specifically when he intends the abolition of the local government finance statement to kick in. Does he see tomorrow’s as the last such statement, or will there be another one for 2018-19? What is the commencement date for that provision?
Mr Jones
The hon. Gentleman has listened intently to every word I have said in this Committee, so he knows that earlier in our deliberations I confirmed to him that this year’s local government finance settlement will not be the last settlement of its type. The local government finance settlement process will continue until the new policy is implemented in 2019-20. Regulations will therefore have to be put in place by 2019, in advance of the forthcoming settlement for local government for that year. I hope that clarifies the matter for him.
The central principle of our approach to implementation of the business rate reforms is that we have developed and continue to develop the detail of provisions through close work with local authorities and businesses. By way of assurance to the Committee and to ensure openness, where possible we will publish draft regulations or policy statements on the content of the provision to be made under the powers in the Bill.
Given the above assurance, I ask the Committee to let the commencement clause stand part of the Bill.
Mr Thomas
I am grateful to the Minister for confirming that the local government finance settlement debate will continue to take place. It is an opportunity for Members across the House to continue to scrutinise not only local government finance as it operates at the moment but, crucially, as we get more clarity, how business rates might end up working when 100% devolved—goodness only knows, we need that clarity.
We have no sense of how the so-called fair funding review will work for each individual local authority. We have no sense as yet of the consequences of the detail of the financial regulations to accompany the Bill. It will therefore be helpful for us to continue to have the opportunity to debate such matters on the Floor of the House and to explore what they mean for each of our local authorities and the public services that they provide to the people of England generally.
It would be helpful to hear a little more from the Minister about any further arrangements for consultation with business. It seems a little odd that before the Bill is commenced, in the light of the huge concern about the business rates revaluation that has hit the media of late, there will not be further detailed consultation with business through local enterprise partnerships. Here is a quote from the Treasury press release that accompanied the previous Chancellor—before he was sacked for incompetence by the current Prime Minister—which outlined how the infrastructure premium would operate:
“Directly elected mayors—once they have support of local business leaders through a majority vote of the business members of the Local Enterprise Partnership—will be able to add a premium to business rates”.
Yet there has been no mention by the Minister of local enterprise partnerships in any of his speeches to date. He might prefer me to have mentioned it earlier in the proceedings—perhaps his memory might have come back to him at that point about why he made the change and decided to cut out local enterprise partnerships from the Bill. It would be good to hear a little more from the Minister about how local enterprise partnerships will be involved in the coming months.
Mr Jones
As was shown earlier, the hon. Gentleman seems to have undergone a complete transformation while scrutinising the Bill, having previously advocated that local authorities should be able to increase the multiplier at will and therefore increase the tax rate on business rates. He then seemed to have a conversion, given that he now wants to look at a review. I set out our reasoning earlier, carefully and in some detail. As I said, the Government considered the issue of business rates as recently as 2015. We looked at the issue carefully and consulted business groups and local authorities, which at that time thought the system we had, although not perfect, was one the Government should continue with. On that basis, I will curtail my comments and commend the clause to the Committee.
Question put and agreed to.
Clause 42 accordingly ordered to stand part of the Bill.
New Clause 2
Needs assessment prior to each reset
‘(1) Before any alteration to the Business Rate Retention Scheme, an independent body must conduct a full needs assessment of every billing authority.
(2) The conclusions of the assessment under subsection (1) must be taken into account when considering any changes to calculations under paragraph 2 of Schedule 7B to the Local Government Finance Act 1988 that are made as part of the BRRS reset.”—(Jim McMahon.)
This new clause would require a full needs assessment to be carried out for every billing authority in order to inform the new tariff and top ups system at each BRRS reset.
Brought up, and read the First time.
Mr Thomas
My hon. Friend makes an interesting point. I would put it slightly differently. It seems odd that some schools offering a service to one group of children benefit from business rates relief, while other schools offering a service to another group of children in the maintained sector do not. My hon. Friend’s broader point about equalising the treatment of schools has considerable merit.
Mr Jones
I will give the hon. Gentleman some background. He is right to say that local authority maintained schools do not get the charitable relief that, say, an academy school does. However, as I am sure he will be aware, those schools are compensated for the business rate they have to pay in the funding formula provided by the Department for Education through local authorities.
Mr Thomas
Let me address the question of the funding formula, because that opens a whole can of worms in terms of the financial pressures facing many of our schools. Some immediate business rates relief, without the compensation to school budgets suggested by the Minister, might provide an additional increase in funding to schools at a time when they most need it.
It is important that we discuss new clause 4 and relief for schools in the context of the funding formula. Almost half of the schools in this country will lose funding. They are already being hit by the 8% real-terms cut that the NAO has identified, but almost half face further cuts in 2019-20 under Department for Education proposals that are on the table for consultation.
At the Public Accounts Committee recently, a number of headteachers laid bare the scale of the challenge facing their schools. Liam Collins from Uplands Community College told the Committee that his school had reduced staff numbers by nine teachers and five support staff over the past four years. He argued:
“We cannot afford to buy text books...We cannot afford to send staff on training.”
That is a dire financial situation. Perhaps a little bit of business rates relief, without a reduction in school budgets, would provide one way to help that particular school.
Mr Jones
Despite the fact that grant maintained schools are compensated for the business rates they incur, the hon. Gentleman wants to exempt them from business rates, although he does not want the same treatment for academy schools, which by definition of the policy he advocates would be out of pocket compared with maintained schools.
Mr Thomas
With all due respect to the Minister, I want the terrible financial situation facing schools across the country to be sorted out. I am merely proposing new clause 4 as one potential route to address one part of that problem.
Stuart McLaughlin, head teacher of Bower Park Academy, said:
“I have cut my teaching to the bare bones. Every teacher is teaching at full capacity. I have very little spare capacity in terms of spare lessons on the timetable, so I am now starting to hit the support staff. My worry about that is that it is going to affect the most vulnerable students.”
Another example of a school in serious financial trouble for which new clause 4 might provide one route for a bit of additional support.
The Institute for Fiscal Studies has also backed up the National Audit Office conclusions about the scale of pressure on schools. It did not identify the apprenticeship levy but it talked about the additional costs from the public sector pay settlement, the increased employers’ national insurance contributions and the increase in the employer pension contribution to the teachers’ pension scheme that started in April 2015 and was not funded by the Conservative party. All that leads up to the 8% cut in real terms that our schools are facing. That situation is exacerbated by the new funding formula for at least half the schools in the country, which will see significant losses.
Organisations within the schools sector, such as the National Association of Head Teachers—not the sort of body to sound the alarm unnecessarily—are also profoundly worried about the funding situation facing schools. It is in that spirit that the Opposition tabled new clause 4. I look forward to Ministers saying why they are so determined not to solve the financial crisis facing schools and hospitals. I also look forward to the Minister’s response to new clauses 8 and 9.
Mr Jones
I have been clear that the liability for rates will operate differently in relation to different types of market. I have also been clear that the same type of regime should apply to non-domestic property, which is certainly the case in this sense. It is for the valuation office to decide on the facts whether an individual market stall is rateable or not.
To conclude, I hope the Committee is reassured that the new clauses are not necessary and would not further our collective aims to support an independent and self-sufficient local government sector. I ask the hon. Member for Harrow West to withdraw the new clause.
Mr Thomas
I am grateful for the opportunity to sum up our debate on new clauses 4, 8 and 9. New clauses 8 and 9 were very much tabled as probing amendments. Although I am not 100% satisfied by the Minister’s response—something that I have had to get used to—I do not intend to divide the Committee on the new clauses.
New clause 4 was also a probing amendment, to find out the extent to which the Minister and his colleagues have really grasped the scale of the financial crisis facing both schools and hospitals. What we have had back from the Minister and from some Government Members in interventions suggests a profoundly worrying complacency about the financial situation in schools and hospitals. One has to hope that the Chancellor of the Exchequer sees things slightly differently, but we are where we are. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 7
Duty to ensure no loss of funding following withdrawal from the European Union
‘(1) This section applies where any funding is provided to a billing authority or Combined Authority by the Secretary of State in consequence of funds made available by EU institutions in the financial years beginning on 1 April 2017, 2018 and 2019.
(2) Where this section applies, it shall be the duty of the Secretary of State to ensure that, in the five year period beginning with the date on which the United Kingdom leaves the European Union, the funding made available to a billing authority in question is not reduced in respect of any funds that were made available by EU institutions in the period specified in subsection (1).’—(Jim McMahon.)
This new clause would ensure that funding available from EU institutions is replaced by funding from the Secretary of State for the five years after exit.
Brought up, and read the First time.
Mr Thomas
I am minded to press the new clause to a vote, such was the clarity of the argument of the hon. Member for St Austell and Newquay. My hon. Friend the Member for Wolverhampton South West has made a compelling case in support of it. The hon. Gentleman has reassured me that, having had conversations with the Treasury, there is no cost associated with it and he clearly has the support of the NFU. The Minister will have to make a pretty powerful speech to convince us not to press the new clause to a vote.
Mr Jones
It looks as if there is no pressure on me to satisfy the hon. Gentleman. I am grateful to my hon. Friend the Member for St Austell and Newquay for raising this important issue. The Valuation Office Agency faces a challenging task of maintaining non-domestic rating lists covering a vast array of different types of property throughout England.
The background to the amendment originates from a rating case concerning a property producing mushroom mycelium, which is essentially the material from which mushrooms are grown. It is then sold on by the ratepayer to mushroom farms, which then produce the final product. The VOA felt that, because the property was not producing the mushrooms itself, it was not able to claim the agricultural building exemption and therefore should not be rateable. The ratepayer disagreed. Eventually, the matter reached the Court of Appeal which ruled that the property should be rateable.
On business rates, there is nothing unusual about that chain of events. Usually, further discussion of such technical rating cases would be confined only to the most dedicated members of the ratings profession. The Government are not usually involved in that sort of discussion, but the Court of Appeal decision has wider implications in this case.
The judgment clarified that there is a difference between market gardens and nursery grounds where buildings are involved. In effect, that means that there is a difference between the exemptions available for market gardens and nursery grounds. The Court of Appeal judgment means that where the activity at a nursey ground takes place only in buildings, it is not exempt because it is not an agricultural building as defined by the legislation. Previously it was a long-held practice to treat such buildings as though they were exempt from business rates. The VOA has been discussing with the industry what the decision means in practice. We understand that it would mean that some ratepayers operating nurseries producing plants prior to the point of sale to the consumer could face a rate bill for the first time. However, the proposed new clause would ensure that those nurseries were again exempt from business rates.
I stress that the Government believe that the exemption for agricultural property is an important part of the rating system. It ensures that large areas of agricultural land and buildings are not liable to pay a property tax that could have a significant impact on the cost of farming. We firmly believe that it is necessary for a line to be drawn for all exemptions and the Court of Appeal has clearly done that in its judgment. It is also important that reliefs and exemptions are targeted where support is most needed. I have therefore asked my officials to look at the impacts of that decision, how it will be applied in practice by the VOA and what it means for the companies affected. I will also meet the NFU to discuss it. The Government keep all taxes, including business rates, under review and I assure my hon. Friend that that includes the implications of the Court of Appeal decision.
Mr Thomas
Given that one should support even Government Back Benchers when they suggest very sensible amendments, I want to clarify whether the Minister will take a serious look at the merits of the amendment and potentially bring something back on Report, or is he just going to go through the motions of a quick chat with the NFU on the back of something else, while his colleague is sent away with nothing?
Mr Jones
The hon. Gentleman is taking an interest in this subject, but I have spoken a number of times to my hon. Friend the Member for St Austell and Newquay, who came to me with this important issue, and I have also spoken to several other hon. Friends on the Government Back Benches who are concerned about it. I have been clear today that the Government take the situation seriously and I have asked my officials to look at the impacts of the decision, how it will be applied in practice and what it means for the companies affected. I will also speak to the NFU. Given the gist of my comments, I hope that hon. Members are assured that we take this matter seriously and that we will consider it carefully before we get to the next stage of the Bill. I hope therefore that my hon. Friend will withdraw his amendment and that, in the spirit of my comments, Opposition Front Benchers will not seek to press it to a division.
Mr Thomas
This is, if you like, Sir David, the David Hodge memorial clause. Surrey County Council has blown out of the water the rationale that the Government once used for referendums. There is a deep irony in the situation this year, where the one council that is likely to impose a 0% council tax rise will be a Labour council and the one council that proposed the single biggest increase in council tax this year is a Conservative council. We have to admire the chutzpah of Mr Hodge. He has managed to get himself a sweetheart deal by completely blowing away the rationale Ministers once had for referendums. It is in that spirit that we move this probing new clause.
Mr Jones
I thank the hon. Member for Oldham West and Royton for his explanation of new clause 12. It was a slightly more constructive effort than that of the hon. Member for Harrow West, who seems to be preoccupied with sweethearts. Perhaps that would have been best placed last week, when the House was in recess and it was Valentine’s day. He seems to persist with a misplaced line of questioning.
The new clause would remove chapter 4ZA from the Local Government Finance Act 1992 and thereby abolish the system of council tax referendums. That would allow local authorities to set whatever increases they choose, without having to seek the approval of local voters.
Arguments in favour of abolishing council tax referendums, or for not setting any referendum principles are certainly familiar to the Government. However, they are not arguments that the Government accept. Government defining an excessive increase has been part of the council tax system for decades. Council tax is currently 9% lower in real terms than it was in 2010-11. It will still be lower in real terms in 2019-20, but only if the Government continue to work with local authorities and maintain a referendum threshold, as promised in their manifesto.
The referendum threshold is not a cap. Councils can set any council tax increase that they like, provided that they have obtained the consent of their local electorate in a referendum. That is direct democracy in action. Local people have the right to choose whether they wish to pay extra council tax for additional spending and councils have the right to make the case to them.
In setting the referendum threshold, the Government listen to the views of local authorities, but clause 4 will formalise that by requiring the Secretary of State to consult their representatives. I believe that that flexible and constructive approach to setting excessiveness thresholds is crucial in striking the correct balance between funding for local services and protection of council tax payers.
Council tax is 9% lower than it was in 2010. That makes a significant case—unlike the 13 years before then, when council tax actually doubled during the Labour Government. I hope that, having reflected on the points I have made, the hon. Member for Oldham West and Royton will consider the challenge that this proposal would present to many council tax payers and withdraw his new clause.
Mr Jones
On a point of order, Sir David. I would like to thank you and Mr Gapes for the skilful and diligent way in which you have chaired proceedings over the past few weeks. There were times at which the Committee may have stepped near to the edge of being in order, and at every opportunity you and Mr Gapes kept us on the straight and narrow, so I thank you and Mr Gapes for that.
I also thank the Committee Clerks for the part that they have played in this Committee and the assistance that they have provided in supporting members of this Committee. In that context, I would also like to thank the people who are here from Hansard. I also thank the Government’s officials for the hard work that they have put into the Bill so far and for the support that they have given to me throughout the Committee stage.
Finally, I would like to thank the members of the Committee. At times, it has been an interesting Committee and although not all Committee members have always seen eye to eye, I think that we have conducted it in a reasonable spirit. Despite the fact that both sides have not seen eye to eye on a number of amendments that have been put to a Division, debate has always been conducted in a respectful way. I would like to thank the members of the Committee for the part that they have played.
Local Government Finance Bill (Ninth sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
On a point of order, Mr Gapes. I would like to highlight to the Committee that on Wednesday last week, my Department published its response to the summer consultation on business rates retention. Alongside that we published a further consultation on the Government’s proposed approach, which provides additional information on the design of the new, reformed business rates retention system.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Further to that point of order, Mr Gapes. We are delighted that you and your fellow Chair have clearly had some influence on the Minister and finally managed to get those documents released. It would have been helpful, though, if the full 450 consultation responses had been published alongside the summary that the Minister released and if he had given a bit more of a clue about how the system will look by 2019. I have a further point of order.
Mr Jones
The Government support clause 37, which introduces schedule 5 to the Bill. Schedule 5 allows billing authorities across England to make property owner arrangements and introduce a property owner levy, which can be raised on property owners in an existing business improvement district.
Business improvement districts have been instrumental in improving the vitality of local high streets and town centres. Property owners are currently able to have their own BID levies, but only in London, due to existing legislation. The Business Rate Supplements Act 2009 introduced property owner BIDs but required a business rates settlement to be enforced in the same area. That has limited property owner BIDs to areas where such a settlement is being implemented, which is currently only for Crossrail. Schedule 5 will remove that requirement, so that it will no longer be the case that a business rates settlement must be enforced in order to set up a property owner levy. We have otherwise sought to ensure that the business improvement district model remains unchanged, so the schedule replicates the existing statutory framework.
Schedule 5 omits schedule 2 to the 2009 Act, which provided for the existing property owner BID arrangements, and inserts new chapter 2 into part 4 of the Local Government Act 2003. Schedule 5 sets out the provisions for the property owner BID. The levy can be introduced only within an existing BID and must be used to fund only the projects that are specified in the relevant arrangements and are intended to benefit those in the district. The levy is raised on those with a relevant property interest. How it is calculated, and which persons with a property interest are to pay it, is left to the discretion of each BID and must be specified in the property owner arrangements.
Mr Thomas
I had hoped to catch your eye after my hon. Friend the Member for Oldham West and Royton to pick up on one particular concern, Mr Gapes, but I will ask the Minister about it now. As I understand it, there is no definitive and accurate record of property owners in the UK, so property owners wanting to take advantage of the clause and schedule may face difficulties in tracking down their fellow property owners. What further steps does the Minister envisage taking—perhaps through work with the Land Registry or other arrangements—to help to tackle that problem?
Mr Jones
We are certainly looking at that area. In terms of bringing forward property owner BIDs, it is obviously extremely important that the whereabouts of property ownership are clearly identified, because a system very similar to that implemented in current BID legislation will be used to ballot property owners in that regard.
Mr Thomas
I wonder whether I could pursue that a little further. I hear the point that the Minister makes, but I wonder whether the Bill makes it easier for property owners wanting to take advantage of the legislation further down the line. For example, would it be sensible for Ministers to contemplate making it a requirement of property owners that they declare their ownership to the local billing authority, in order to make it easier for the local authority to collect other charges and, in the context of the clause, to make it easier for property owners to talk to each other about a possible BID in future?
Mr Jones
There are no plans to do that at this stage, but I certainly hear what the hon. Gentleman says. I will take that point seriously and consider those comments, as I always do with points he raises. Obviously, as I said before, it is important in the context of what we are talking about that the ownership of property is clearly identified.
Coming back to my original point, a property owner levy cannot be introduced until proposals have been approved in a ballot by those who would be liable to pay it. For a ballot to be successful, it must pass a double-lock mechanism—by receiving a majority of votes cast, and with the total rateable value of the properties of those voting for being more than that of those voting against. Several other important checks and balances remain in the model. The billing authority may veto property owner proposals under prescribed circumstances, and those who voted on the proposals retain the right to appeal to the Secretary of State to overturn that veto. The Secretary of State will also have the power to declare a ballot void if there have been material irregularities in the ballot process.
The levy can be imposed for a maximum of five years, after which the BID body must write a new proposal and go back to the ballot. We have seen the success of occupied BIDs and property owner BIDs in London, which give local businesses the tools to undertake projects that improve their high streets and town centres. Overall, the schedule will give property owners across the whole of England the opportunity to improve their local environment and play a greater role in efforts to shape their local area.
Mr Thomas
I have always admired my hon. Friend’s prodigious research efforts before he attends a Bill Committee. He makes the fair point that legislation has been introduced to tackle this problem, but the less scrupulous and those who have something to hide have become more skilled and found new ways to hide their ownership.
I gently suggest to the Minister that if, for the best of reasons, we want to make it easy for business improvement districts to be established where appropriate, surely we need to help property owners by making it easier to access the details of who else owns property in their district. I gently encourage the Minister to reflect on that at length and perhaps to bring forward amendments or at least more information on how Ministers are going to make that easier. I look forward to the Minister’s reply.
Mr Jones
To respond directly to the hon. Member for Harrow West, he just mentioned that we did not take this step in the 2014 regulations. To clarify, that is because new primary legislation is needed to make the change, so we could not have pursued it through the 2014 regulations. I dealt with the ownership of property during his interventions on my initial comments on the clause.
The hon. Member for Wolverhampton South West mentioned the potential proliferation of different supplements. In order to bring in a business rate supplement, one would need a ballot of businesses, unless the supplement was being levied by the Mayor of a combined authority, in which case it would be done in consultation with business. On property owner BIDs, again there would be a ballot, but that would be a ballot of property owners rather than ratepayers, so there is a distinct difference.
Mr Jones
I was coming on to rateable value, because the hon. Member for Wolverhampton South West also asked that question. We will set out how the matter is to be determined through regulations. It is envisaged that property owners will set their own threshold, but we are clear that that has to be subject to the ballot of those property owners. It is not just something that will be imposed on a particular property owner. That brings me to the conclusion of my comments.
Question put and agreed to.
Clause 37 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 38
Power of mayoral combined authorities to impose business rate supplements
Mr Thomas
I beg to move amendment 19, in clause 38, page 28, line 38, after “2009”, insert—
“(f) any other billing authority.”
This amendment would add any billing authority to the list of levying authorities with a power to impose business rate supplements.
I hope not to detain the Committee too long on this amendment, although I do have a series of questions for the Minister.
Amendment 19 seeks to put right the rather odd exclusion of non-mayoral combined authorities from the power to levy business rate supplements. It will be interesting to hear why Ministers think that the existence of a Mayor is the only thing that should be pivotal to whether an area should be allowed to raise money for investment in infrastructure. One would have thought that the principle of localism would allow local authority areas to come forward and decide whether they needed a Mayor, and that Ministers would respect the decisions of the people of England in that regard.
In the particular case of business rate supplements, we should remember that a ballot of non-domestic ratepayers is required. A series of checks and balances is therefore built in to the levying of business rate supplements already. Given that, it seems even more unfair that non-mayoral combined authorities should not have the power to levy business rate supplements, if they have identified with their business community a significant need to raise money for investment in infrastructure. That smacks of the nanny state—a mentality that “Whitehall knows best” and should be able to dictate what happens in Swindon, Cornwall, Totnes or Northamptonshire. We believe that the people of England should be trusted to make a decision in their particular areas about whether they have a Mayor. Denying them the chance to work with their business community to raise money for much-needed investment in infrastructure seems to be particularly unfair.
Mr Thomas
The Federation of Small Businesses raised a particular concern with me about the potential for both business rate supplements and property owner levies in terms of BIDs to be covered. If the hon. Gentleman will forgive me, that issue probably works best as part of a clause 38 stand part debate. I want simply to equalise what Ministers are giving to mayoral combined authorities with those combined authorities that do not have a Mayor. It is called fairness. I appreciate that that is a concept that Conservative MPs sometimes struggle to come to terms with, but I hope that our efforts in the last two weeks have been helpful, particularly to the hon. Member for Thirsk and Malton.
Mr Jones
The Business Rate Supplements Act 2009 was, indeed, brought through Parliament during the period of a Labour Government. That was done off the back of the review by Michael Lyons, who recommended not to include district councils in regard to business rate supplements. Does the hon. Gentleman therefore believe that the legislation made by his Government in 2009 was flawed?
Mr Thomas
I think that times have moved on and people have seen the success of business rate supplements as they have worked, particularly in London. Now is the time to make a sensible change. I certainly do not think it was the intention of the last Labour Government to say that if an area does not have a Mayor it must for ever be denied the chance to have investment in infrastructure.
Mr Thomas
We have had consultations with a whole series of organisations which wanted reform to the Bill because of the poor way in which it has been drafted and brought forward by the Minister. I encourage the hon. Gentleman to have patience, as I hope to raise the question of double charging for investment under clause 38 stand part. He is not normally excitable, so I encourage him to be patient. I look forward with interest to hearing from the Minister why he thinks we should discriminate against those areas and people of England who do not have a Mayor.
Mr Jones
I thank the hon. Gentleman for his explanation of amendment 19. The amendment would add to clause 38 any billing authority to the list of authorities set out in section 2 of the Business Rate Supplements Act 2009 that would be able to use powers under the Act to introduce a business rate supplement.
Hon. Members will understand that we cannot support this amendment for several reasons. Many of these will be familiar from the debate on amendment 29, which proposed adding billing authorities to the list of authorities which could levy an infrastructure supplement. However, I think it might be informative to look back at the report that I alluded to earlier that originally suggested the introduction of a business rate supplement.
Sir Michael Lyons in his 2007 report set out the benefits that he felt could be delivered through a new flexibility on business rates. In doing so, he had reservations about providing the power to a wider range of authorities, particularly with business concerns about the scope for complexity if the settlement applied across all authorities. That was a legitimate point about complexity that the hon. Member for Wolverhampton South West made earlier.
Sir Michael Lyons recommended, therefore, that the power should be available to upper-tier authorities and unitary authorities. However, importantly, he highlighted the scope for engagement and development of joint plans between both tiers of local government in two-tier areas which could assess how the revenues raised could be utilised to benefit the wider area.
As the Bill that became the Business Rate Supplements Act progressed through Parliament, there was a wide-ranging debate about which authorities should have the power to take forward the supplement. Following those well-informed debates, Parliament came to the conclusion that the supplement should be available in England to the GLA and to county and unitary authorities. The Bill we are now considering includes a clause to add mayoral combined authorities to the list of authorities able to levy a business rate supplement, but essentially recognises that such bodies did not exist at the time of the 2009 Act. However, I do not believe that the circumstances have changed between 2009 and now to warrant extending the power to all billing authorities—that would add further complexity for business, as Sir Michael warned against at the time. Instead, I believe the billing authorities that are not unitaries should engage proactively in partnership with their upper-tier authorities to develop imaginative proposals for a business rate supplement that can deliver benefits for all local businesses. That does not require a supplement at billing authority level.
The hon. Member for Harrow West said that it is a probing amendment and I hope that in that spirit, and having reflected on the points I have made, he will withdraw the amendment.
Mr Thomas
Briefly, I want to raise a concern that the Federation of Small Businesses put to me. It relates to the intervention by the hon. Member for Thirsk and Malton. The FSB’s concern is that the Bill already allows for two levies to be levied on small or medium, as well as large, businesses—the business rates supplement and the property owner-led business improvement districts. The FSB is concerned that that would potentially see another 4% on top of existing business rates as a result of the Bill as it is currently drafted. Its concern is that that would make business rate bills even higher. In particular, in some areas in London and, notably, the south-east—although not exclusively those areas—that would send business rate bills even higher. Given the FSB’s considerable concern about the size of business rate bills following revaluation, it would be good to hear the Minister’s view about the potential for an extra 4% on top of existing business rates.
Mr Jones
Clause 38 is relatively straightforward and makes a number of linked amendments to the Business Rate Supplements Act 2009. The rationale for the amendments is to recognise that at the time that the Business Rate Supplements Act gained Royal Assent, mayoral combined authorities did not exist and therefore could not have been considered for inclusion within the types of authority that were given the power to raise a business rate supplement. The 2009 Act provides that power to the GLA and to upper-tier and unitary authorities. The Government are moving forward with arrangements for establishing directly elected Mayors in combined authority areas, and elections will take place in six areas in May.
We have already discussed the particular functions and roles of mayoral combined authorities that merit the use by such authorities and the GLA of the infrastructure supplements set out in part 3 of the Bill. Clause 38 closes the gap that exists in the 2009 Act and adds mayoral combined authorities to section 2 of it as a levying authority for the purposes of that Act. It also clarifies that the functions of a mayoral combined authority are exercisable only by the Mayor acting on behalf of the authority, providing the focal point for accountability for the supplement. Subsections (3) and (4) of clause 38 make consequential amendments to sections 3 and 5 of the 2009 Act to reflect the addition of mayoral combined authorities to the list of levying authorities for the purposes of the business rate supplement. As I said, the clause effectively tidies up the gap in the 2009 Act that could not have been foreseen at the time.
The hon. Member for Harrow West mentioned adding to the burdens on business, and that is a very important point. In theory, it is certainly possible that businesses could be liable for a number of different settlements. However, the purpose of each of these would be to deliver directly benefits to the businesses, which would also have the opportunity to frame the nature of those improvements, either through ballot or extensive engagement and consultation, so we believe there are significant safeguards. On that basis, the clause should stand part of the Bill.
Mr Jones
Clause 41 sets out the territorial extent of the Bill: it applies only in relation to England. However, if the Bill is passed, it will form part of the law of England and Wales. Because England and Wales are a single jurisdiction, legislation cannot form part of the law in England without forming part of the law in Wales, even if it does not have effect in Wales. The clause clarifies that situation.
Question put and agreed to.
Clause 41 accordingly ordered to stand part of the Bill.
Clause 42
Commencement and short title
Mr Thomas
I beg to move amendment 52, in clause 42, page 30, line 8, leave out from “14” to end of line 21 and insert
“Schedule 3 and this section.
(2) The remaining provisions of this Act come into force on 1 April 2019.”
This amendment would provide that the provisions of the Bill as enacted, other than the provisions relating to telecoms relief, guidance about notices relating to non-domestic rates and the provision relating to preparatory expenditure for digital services come into force on 1 April 2019.
Mr Thomas
I welcome that. I can only hope, given what the hon. Gentleman has just said, that there are no businesses in Swindon that are worried about the revaluation of business rates, which is what he implies. Perhaps we can discuss that issue when we consider amendment 54.
We know that the social care system is in crisis. We do not want to make that worse, but we also know that a series of other statutory services are not being properly funded either. Full business rates devolution potentially provides the opportunity to close some of the £5.8 billion funding gap that the Local Government Association has identified. However, there is a “but” to that. One of the few things we do know as a result of the summary consultation document published last week is that Ministers intend to axe the £3 billion public health grant that currently goes to local authorities, plus the rural services grant, which may interest the hon. Member for Thirsk and Malton. They have also confirmed the abolition of the Greater London Authority transport grant.
Already, therefore, some of that potential additional £12.8 billion of business rates has been spent, just in the two weeks that we have been considering the Bill. Hopefully, by 2019, we will know exactly what additional responsibilities Ministers want to require of local government and whether there will be any section 31 grants to help to pay for those additional responsibilities. As a result, we will be in a better position to assess the long-term financing of local government.
There is also the question of whether the system of business rates is affordable. I will dwell on that issue in speaking to amendment 54. One of the benefits of amendment 52 is that it would delay the triggering of the majority of the Bill’s provisions, which would give us the chance to have a period to assess properly whether the business rates system is fit for purpose. In that context, I offer amendment 52 as a sensible opportunity to pause, to reflect on local authority financing and to consider whether the business rates system is entirely fit for purpose, or whether there are other ways that we need to think about in terms of the financing of local government.
There is huge concern across councils up and down the land—not only Surrey County Council, but across local government—about their finances. The last thing we want to do is to make the situation worse by getting wrong the implementation of this particular proposal.
Let me turn to amendment 54, which you, Mr Gapes, very generously allowed the debate to begin on. The question is: do business rates work for businesses, do they work for local authorities and do they work for public services? It seems to me, given the huge concern that exists about the business rate revaluations and given other concerns about how local government will be financed, that there should be a full review of business rates before this Bill comes into force.
Given that six of Amazon’s nine distribution warehouses are set to have a fall in business rates, given how little it pays in corporation tax and given how high the business rate bill is going to go up by for many small and medium-sized businesses in our high streets, we have to wonder whether we have the system as correct as we might. The British Retail Consortium has repeatedly voiced the concern—and so did we, earlier in the Committee’s consideration of the Bill—that online retailers have an advantage in terms of costs over businesses that rely on bricks and mortar, not just because their liabilities are lower but because they can offer cheaper prices compared with those on the high street who have to pay business rates. What does that mean for the long-term future of our high streets up and down the country? My hon. Friend the Member for Oldham West and Royton and, to be fair, the hon. Member for North Swindon alluded to the importance of our high streets as community centres and the sense of place that we all value.
Reputable media outlets such as The Times have suggested that online retailers are rated at less than one eighth of the valuation per square metre of some small shops. That is a huge cost differential. Whether it is fair is an open question but, as our economy begins to change significantly and technology moves forward rapidly, we need to think about whether we are levying tax on business in the most appropriate way.
Business rate revaluation hits businesses hardest in areas that have seen rapid property price increases. London is one of the most severely affected areas. It is not just London, though, that is severely hit. I want to come on to Southwold in Suffolk, just south of the Waveney constituency. Sadly, the hon. Member for Waveney is not with us today. He might usefully have reflected on that story. However, we do know that many businesses in Suffolk have raised their concerns.
How significant are the increases in London? You will be interested in this, Mr Gapes, given the constituency you represent. I am sure that the hon. Member for Thirsk and Malton will take this particularly seriously, even if he does not like London very much. The FSB says that business rates in the capital are set to increase by 11%. In some parts of London, the increases are much more significant than that. For example, in Islington, rates are set to increase on average by 27%, and in the City of London, by 25%. In some areas of Mayfair, the increase will be as high as 415%. In the constituency of my hon. Friend the Member for Lewisham, Deptford, the business rate is set to increase by an average of 36%. My hon. Friend the Member for Eltham, who could not be here this morning, will see business rates increase on average by 21% in his borough of Greenwich. Forgive me for being mildly parochial, but in Britain’s most important borough, Harrow, business rates are likely to rise by an average of 14%. In Hillingdon, which is next to Heathrow airport—set to benefit from a third runway—rates will increase by an average of just 1%.
Mr Jones
I hear what the hon. Gentleman says. He knows that this is an independent revaluation, not a revaluation that has been directly undertaken by the Government. If he is so opposed to the way this revaluation has been undertaken, why did his party not oppose it when it went through both Houses of Parliament?
Mr Thomas
I must gently say that not even we thought that the Government could get this so badly wrong. I want to come on to the question of resources for the Valuation Office Agency, which have been significantly cut and are leading to many delays in appeals by businesses that have genuine concerns about their revaluation, which has not helped either.
There is a more general point. As politicians, we cannot always predict what is going to happen, but we should be willing to react when circumstances change. There is such concern across the business community about the potential impact of the revaluation on small and medium-sized businesses that it is time that we listened to those concerns.
Mr Jones
All of a sudden the hon. Gentleman seems to want to be the champion of small business—something many of us would find difficult to recognise—by saying that business rate bills are too much for businesses. When this Government bring forward a measure in this Bill to reduce the indexation on the business rate multiplier from the higher RPI, to the lower CPI, which would save businesses hundreds of millions of pounds in its first year alone, he seems to oppose it. What is his position?
Mr Thomas
The Minister is being inaccurate. As he knows full well, we did not oppose that change; we do want to help businesses. We are the party of small business in particular, but the party of business more generally. When business groups make serious representations to us, we listen. They are profoundly concerned about the business rates revaluation. Surely it is also the responsibility of all of us in the House to consider whether business rates will provide sufficient revenue for local authorities to fund essential public services. Local authorities express serious concern to us as to whether, given the huge cuts to revenue support grant, business rates, which will be one of only two key sources of local authority income down the line, will provide enough resource. When one considers too the impact on other public services, such as schools and hospitals—we will look at that, I hope, as part of new clause 4 or 8 I think, this afternoon—
Mr Jones
I will certainly get back to the point, Mr Gapes. As I was explaining, there was a very clear message from the responses we received to the business rate review undertaken in 2015: the clear view then, including from the business community, was that they wanted to retain the current system.
Mr Jones
I will make some progress and then I will take the hon. Gentleman’s intervention.
There were also other clear messages from that review. People called for more protection for small businesses, and we have permanently doubled small business rate relief as a result. That means that 600,000 small businesses —a third of businesses overall—will pay no business rates at all. Understandably, many businesses wanted their rates cut and, in particular, for business rates to be uprated by CPI. The Bill delivers that change, which represents a cut in business rates every year from 2020—a saving of around £370 million in the first year alone and even more in each and every year after that.
People also called for the administration of business rates to be modernised. Again, we have listened and are taking action, including measures in the Bill to make it easier for businesses to receive and pay their bills. Importantly, local authorities called for greater rates retention and increased devolution of rate setting. They said that that would help them to get control of their finances as well as boost growth and respond to the needs of businesses in their areas. Does the hon. Gentleman still want to intervene?
Mr Jones
Before the hon. Gentleman intervenes again, perhaps he will explain his position on the measure in the Bill to reduce the multiplier. We are reducing the multiplier through the provisions in the Bill and we have clearly said that the multiplier will be based on an indexation of CPI rather than RPI from 2020. That will save business £370 million in the first year of that system alone. Does the hon. Gentleman agree with that? He has seemed to disagree throughout this Committee.
Mr Jones
I think I am going to move on because I have answered that question on several occasions.
The Bill delivers on providing a framework for local government to retain 100% of locally raised business rates, giving councils new powers to reduce business rates in their areas to boost growth and providing for Mayors in combined authority areas to seek investment in local infrastructure projects. Amendment 54 suggests that those reforms should be delayed until after further consideration of the impact of business rates on local government finances.
As I have said many times, the move to 100% business rates retention is a reform that councils have long campaigned for. Councils are right to argue that the reforms will help them move to greater self-sufficiency. At a national level, business rates are a relatively stable tax. We recognise that there can be change and volatility locally, and we have been clear that we want to design this scheme in a way that helps councils to manage better those local changes. That is why we are taking measures in the Bill to help councils manage the impact of successful business rates appeals.
We have been clear from the outset that we will continue to make sure that there is a redistribution between authorities so that no council loses out because it currently collects less in business rates. That is why there will continue to be a safety net to help cushion councils from significant falls in their business rates income. Our continuing engagement with local government on the detail of the scheme will help ensure that the aspects of the new system work in a way that helps councils to manage local volatility.
As I have demonstrated, the amendments are clearly unnecessary and would prevent us from delivering on a range of commitments that business and councils have called for. On that basis, I hope that the hon. Gentleman will withdraw his amendment.
Mr Thomas
I do not intend to press amendment 52 to a vote at this point, not least because I take the Minister’s point about rural rate relief. We would certainly not want to stand in the way of that additional support for businesses in rural areas. We may well come back on Report to the question of a delay.
The Minister has not been convincing on amendment 54. I am disappointed that he has cited previous looks at business rates as an excuse for ignoring the very real difficulties that many businesses will face as a result of the revaluation that has taken place. He ignores the difficulties arising from the cutbacks at the Valuation Office Agency in relation to enabling businesses to have their revaluations considered on appeal in good time. He also ignores the real concerns of local authorities about how much business rates income there will be when Ministers finally decide what additional responsibilities are to be handed over.
We know that just over £3.5 billion of extra responsibility has just been handed to local government, reducing the £12.8 billion pot that Ministers boldly said would be passed over as extra money for local authorities. Those specific additional grants have been cut back. We have heard the Minister confirm that businesses could face an extra 4p on business rates in respect of the multiplier, as a result of the business rates supplement and the BID.
The complacency from Ministers—not just the local government finance Minister, but across the Government—about the situation faced by businesses and local authorities means that I am going to seek to divide the Committee on amendment 54. I beg to ask leave to withdraw amendment 52.
Amendment, by leave, withdrawn.
Amendment proposed: 54, in clause 42, page 30, line 8, leave out from “14” to end of line 21 and insert
“Schedule 3 and this section.
‘(2) The remaining provisions of this Act shall only come into force after the Secretary of State—
(a) has conducted a review into the future of business rates, and
(b) has assessed the impact of the future of business rates on local government finances.”—(Mr Thomas.)
This amendment would require the Secretary of State to conduct a review into the future of business rates and their impact on local government finances before the commencement of the Bill (save for the provisions under sections 8, 13, 14 and Schedule 3).
Question put, That the amendment be made.
Local Government Finance Bill (Eighth sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Mr Thomas
The last time I visited that coffee shop, which has fantastic views of Blencathra and Skiddaw—two of the great English mountains—although there were toilets there, that was not what the bulk of the premises were being used for. It would be interesting to probe whether it has the potential to get at least some relief under clause 9, but let me not test Sir David’s patience by being diverted down that particular route.
I would like to ask Ministers why, in their view, rural rate relief is so limited and whether there might not be scope for providing more assistance to businesses in the countryside, more generally and also given the rise in online businesses, which do not require such large premises. In particular, it would be good to hear what the Government will do to help the nascent solar panel industry, particularly those businesses seeking to put up solar panels in rural areas.
Mr Jones
Thank you, Sir David, for allowing me the opportunity to respond to the shadow Minister. He mentioned rural rate relief. Clearly, there is a key criterion for eligibility. The idea of rural rate relief is to ensure that key amenities are available in rural areas. He seems to have conflated it—at some length—with the business rate revaluation. As he will know, the revaluation is not a process designed to raise any more or less money for the Exchequer; it is a fiscally neutral exercise meant to ensure that rateable values reflect property rents and changes in those rents over the revaluation period.
In the 2017 revaluation, nearly three quarters of ratepayers will see either no change or a reduction in their bill. The hon. Gentleman seems suddenly to have an interest in rural areas. Most people in rural areas think that the Labour party has generally neglected them when it has been in government, but he now seems to be taking a more significant interest, which perhaps we should welcome. Rural businesses, if their rates have increased, will also be eligible for part of the £3.6 billion transitional relief scheme that we are introducing at the same time. I hope to reassure him that, in its totality, the business rate revaluation will predominantly reduce rate bills in rural areas by an average of 4.4% and in significantly rural areas by an average of 6.4%.
Mr Thomas
I would gently point out that it was not the Labour Government who sought to close hospitals in rural areas, such as the one in Allerdale Borough Council’s area that serves the community of Threlkeld, to which I referred. I suggest that the Minister is being rather complacent about the impact on some rural businesses as a result of the revaluation. Have Ministers considered extending rural rates relief so that other businesses in isolated communities can benefit?
Mr Jones
We keep taxes continually under review. As I said to the hon. Gentleman, we are not complacent. We have put in place a significant package of transitional relief in that regard. He has waxed lyrical about Allerdale. Having been up to that part of the country recently, I know how beautiful it is, but I also observed that the local economy is not just about tourism and related activities. It is also heavily based on the nuclear industry. There are many people in that area who depend on the nuclear industry for their livelihoods. I would say to the hon. Gentleman, very gently, that his party’s policy on nuclear is probably the biggest threat to that particular part of the country. [Interruption.]
The Chair
That was a very clever way of continuing the debate. I think it is best if we move on.
Rob Marris
I hope the Minister can point to this, because I cannot find it, but my hon. Friend referred to the Chancellor’s announcement that mentioned a five-year period. I cannot find a reference to a five-year period in schedule 3. It may be there and I just cannot see it, or it is somewhere else and the Minister can point it out to me.
I see in schedule 3 more than four pages and five formulae. The ever-helpful Library brief cites on page 37 documentation from the autumn statement saying that this measure
“would reduce business rate revenue by £10 million”.
For a company such as BT, £10 million is not a huge amount of money, but for everyone in this room, it is. Nationally and relatively—I stress “relatively”—it is not a huge amount of money, but we get a four-page schedule and five formulae. That strikes me as completely over the top.
We see in schedule 3—on page 46, lines 30 and 31, page 47, lines 37 to 38, and page 48, coincidentally lines 30 and 31 again—the same wording:
“any conditions prescribed by the Secretary of State by regulations are satisfied on that day.”
So here we have the Secretary of State and more regulations. Then when I look at the power to make regulations in paragraph 12 on page 50 of the Bill, it says:
“any power to make regulations conferred by virtue of this Schedule”—
schedule 3—
“includes power to make provision having effect in relation to times before the coming into force of this Schedule”.
I would like the Minister to talk the Committee through that a bit. No doubt he will say something like this happens all the time, but I am a bit uneasy about what seems on the face of it to be a retrospective power in schedule 3, paragraph 12. That is a little worrying. Even though I appreciate it may be a power that would be used or is intended to be used to lessen the tax on a particular business or set of businesses, I still find the retrospection a little troubling.
Mr Jones
The Government intend to support the roll-out of a full-fibre telecommunications infrastructure for all. Full-fibre broadband will deliver a step change in the speed, service quality, security and reliability of broadband services. It will provide important support for a more productive economy and boost the prospects for economic growth.
In the 2016 autumn statement, to which the hon. Member for Harrow West referred, the Government announced £1 billion of new funding to boost the UK’s digital infrastructure. That includes investment of £400 million in a new digital infrastructure investment fund to boost commercial finance for emerging fibre broadband providers. Alongside that package, the Chancellor announced 100% rate relief for a new full-fibre infrastructure in England. Clause 8 and schedule 3 will introduce that relief, which will apply for five years, commencing on 1 April 2017. Hence this part of the Bill will have a retrospective effect. I hope that the hon. Member for Wolverhampton South West understands the principle behind the retrospection.
Mr Jones
I will come to the cost a little later. The schedule provides powers to award rate relief to telecom networks. Some networks appear on the local rating lists held by local authorities and some appear on the central rating list held by the Secretary of State. The schedule therefore introduces the new relief for both local rating lists and the central rating list.
The powers in the schedule will allow the Secretary of State to set conditions on when the relief will apply. Through these powers, we will target the relief on operators of telecom networks that install new fibre on their networks. That will incentivise and reward those operators who invest in the broadband network.
These are concepts that we have not previously defined for business rates. The powers in the schedule will therefore allow us to develop definitions with experts in the telecoms and business rate sectors. By taking this approach we can ensure that we accurately capture in the relief only those parts of the telecoms networks that comprise new fibre. There is a distinction there because it is important—by definition, this is an incentive—that we incentivise the laying of new fibre cable. We are not looking to fund fibre cable that may have already been laid but not switched on, so to speak. I am absolutely clear that this is for new fibre.
Mr Thomas
I rise to make two points. It was interesting to hear the contribution of the hon. Member for St Austell and Newquay on how he thought we got to this point. I commend him for his successful lobbying, but I wonder why Ministers could not have gone a bit further. There are already business rates exemptions for agricultural land, presumably because of its importance to rural communities and to the countryside that we all value. Given the growing concern about the long-term financing of public toilets, one wonders whether it is time to dwell on the question of whether public toilets should be given full business rates relief. I have to be honest; I have not looked into the issue in detail yet, but it is a question worth posing to Ministers.
I come back to the example of the Threlkeld village hall coffee shop, which I spoke about before, and which my hon. Friend the Member for Wolverhampton South West tempted me to flag up on this issue. It has toilets that are used by members of the public, predominantly when they come in to use the coffee shop, but it is the only place in the community other than the pub where they might do so. The village hall is a social enterprise. Would business rates relief be on offer to that part of the premises that has toilets, if members of the public can use them?
Mr Jones
I will deal with the hon. Gentleman’s point in a moment. First, public toilets contribute to high-quality public spaces, and are an important amenity for our communities, as has been said in this debate. They help people, particularly older people, to enjoy what our country has to offer, and to continue to live an active life. That is why we are introducing a measure through clause 9 that will allow local authorities to use their discretionary powers over business rate relief on publicly owned toilets. As my hon. Friend the Member for St Austell and Newquay said, Conservative MPs, particularly in Cornwall, lobbied the Government significantly on this issue. I am sure that he is delighted that the measure is being put into legislation.
Under current legislation, a billing authority cannot grant discretionary relief to properties occupied by a local authority. To pick up on the point made by the hon. Member for Wolverhampton South West, local authorities can grant rate relief to places where owners of private property allow the public to use their conveniences. I hope that that reassures him.
Clause 9 will amend billing authorities’ discretionary relief powers, which are set out in section 47 of the Local Government Finance Act 1988, and will give them the power to grant discretionary relief to publicly owned toilets. The clause will help councils to keep toilets open, and importantly, it will pave the way for savings by parish and town councils, which often bear the burden of maintaining such facilities. Where a billing authority decides to grant discretionary relief, the relevant business rate liability will be reduced or removed altogether.
I will pick up on a couple of points made. I did not catch the name—
Mr Jones
It is kind of the hon. Gentleman to assist me. That sounds to me like it might be a charitable organisation. If that is the case and the property is used wholly for charitable purposes, there is a fair chance that it would qualify for charitable relief, which would reduce the rating liability by 80%. It might be worth him looking into whether that is the case.
I will not go into what the hon. Member for Oldham West and Royton said about the principle of whether NHS hospitals and so on should be subject to business rates. We will debate that fully when we deliberate on a new clause. I certainly took on board what he said about the challenges in some places where there are no public toilets at all; that is a fair point. One of the places that he mentioned was Merthyr Tydfil, which he will know does not come within the remit of the Bill, as it is under Welsh jurisdiction. He will be interested to know that it is my understanding that Wales does not have such a rate relief scheme for public toilets. Perhaps the Labour Administration in Wales might want to take a leaf out of this Parliament’s book and consider implementing a similar scheme.
This is a highly beneficial clause that will support local authorities in keeping valuable public toilets open by reducing the cost of maintaining them, thus preserving important amenities not just for local people but, in many areas, for tourists and visitors. I commend the clause to the Committee.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Clause 10
Central non-domestic rating: other reliefs
Amendment made: 40, in clause 10, page 12, line 32, at end insert—
‘( ) In section 67 of that Act (interpretation: other provisions), in subsection (7), for “and 54ZA” substitute “, 54ZA, 54ZB and 54ZC”.’—(Mr Jones.)
Section 67(7) of the Local Government Finance Act 1988 provides that certain provisions of that Act apply on a particular day if they apply immediately before the day ends. This amendment extends section 67(7) to cover the new sections 54ZB and 54ZC inserted by clause 10.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Thomas
I will not go down that particular route—you might get annoyed with me, Sir David, and I would not want that to happen—but my hon. Friend makes a good point.
It is worth remembering that the central list primarily focuses on utilities or property belonging to the formerly nationalised industries. One thinks about the privatisation of the water industry, for example, where in general water companies are mostly owned by private equity investors that have taken on billions of pounds of debt, often in the form of loans from shareholders, which the chair of Ofwat as recently as 2013 suggested was morally questionable, in order to avoid corporation tax costs. One wonders whether it is entirely appropriate for such companies to benefit from reliefs in the context of concern about water companies and other privately owned utilities not paying as much corporation tax as they might. It is in the spirit of inquiry that I ask those questions.
Mr Jones
This clause, and clause 11, are concerned with the operation of one of the less well known parts of the business rate system: the central rating list. Most properties are assessed for business rates on the local rating list for the authority where they are located. In cases where a property sits over the boundary of more than one local authority, the valuation officer will place that property into the rating list they believe contains the largest part of the property by value.
Those well established and common-sense rules deal satisfactorily with most properties. However, some properties are less suited to those rules. Network properties, such as the electricity, gas, water, railway and telecom networks, may span many local authority areas. It is of course very difficult—or impossible—to say into which local list those networks should fall, and it would be equally difficult to break up the rating assessments into individual local areas. Therefore, those networks are instead placed on a central rating list maintained by the central valuation officer and held by the Secretary of State.
The clause introduces charitable and unoccupied property relief to the central list. I would like to say that these are not new reliefs; the same properties on local rating lists have been entitled to relief since business rates were first introduced in 1990. We are merely replicating those reliefs on the central list. It is of course fair that properties that would be eligible for relief on local lists should also be eligible for relief on the central list. Introducing charitable and unoccupied relief to the central list will therefore allow us to include any properties on the central list that may become eligible for such reliefs.
A couple of questions were asked. First, in relation to charity relief and whether we will look to extend that, as I said a little earlier, all taxes are generally under review, but there are no plans at this time to change the system of charitable reliefs.
The hon. Member for Harrow West asked about the cost of the changes we want to make to the central list. We are not aware of any existing properties on the central list that may be eligible for charitable or unoccupied relief. The canal network was on the central list when it was occupied by the British Waterways Board, but since it has passed to the Canal & River Trust it has been on the Birmingham local list, where it receives charitable relief. The extension of these measures to the central list will allow us, where appropriate, to move on to the central list properties that may be eligible for relief.
Mr Jones
I thank the hon. Gentleman for that question. As I said, we are looking to bring these provisions into line with the provisions on the main rating system and the main local list, but we are not aware of any existing properties that may be eligible for charity or unoccupied reliefs at this time. On that basis, I will leave it there in the hope that clause 10 will stand part of the Bill.
Question put and agreed to.
Clause 10, as amended, accordingly ordered to stand part of the Bill.
Clause 11
Central non-domestic rating lists
Amendment made: 41, in clause 11, page 15, leave out lines 7 to 9 and insert—
“(8B) In relation to England, a hereditament falls within a description or class on a particular day if (and only if) it falls within the description or class immediately before the day ends.”;”—(Mr Jones.)
This amendment makes it clear when a hereditament is to be regarded as falling within a description or class for the purposes of Part 3 of the Local Government Finance Act 1988.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Thomas
I have some brief questions on clause 11. According to the explanatory notes, Ministers are apparently worried that maintaining the central list would give rise to an increasingly heavy process and regulatory burden. It would be good to hear an example from the Minister to understand the justification for that concern. The fear, rightly or wrongly, is that it could affect the business rates income of a local authority adversely if a large property were moved on to the central list from the local list. What estimate, if any, is there for the likely annual impact on the central list and what arrangements for consultation between the local authority and the Department would there be before a property was moved off the local list and on to the central list?
New section 52A(2), which clause 11 inserts into the Local Government Finance Act 1988, allows separate rateable values for separate types of property to be attributed to separate types of property in the future. Can the Minister give an example of when and how that new power might be used?
Mr Jones
Clause 11 is concerned with the administration of the central rating list. The central list mostly comprises network properties that span many local authority areas and so are less suited to being on local rating lists. The list itself is a public document and is readily available to view on the Valuation Office Agency’s website. It includes ratepayers such as Network Rail, BT and National Grid together with their rateable value. It is clear and transparent which ratepayers and networks appear on the central list and what they pay in business rates. The rates bills on the central list are collected by my Department and directed for the benefit of local government.
When the system was first introduced in 1990 there were fewer companies than now operating a smaller number of large utility networks and infrequent changes were needed to the central rating list. However, we increasingly find that we have to make several minor administrative regulations a year just to maintain the accuracy of the existing central rating list. New operators also continue to join such sectors with new properties and it is proving increasingly difficult to keep pace with these changes using the existing system of regulation. As a result, some of the new network properties, and especially those in the telecoms sectors, have been assessed on the local rating lists instead of the central rating list. The choice of which local list to place such networks on is difficult and often the subject of challenge. In turn, that has created uncertainty and instability for local government revenues. As such, the current operation of the central rating list does not provide us with a solid foundation on which to move to 100% business rate retention.
That problem has been recognised by local government. The sector has called for reform in this area. Therefore, the Government intend to devise and operate a transparent policy for which properties should be appearing on the central rating list and then apply that policy consistently from the outset of the 100% retention scheme. That will provide certainty for both ratepayers and local government and is a reform that has been welcomed by local government.
Mr Jones
The hon. Gentleman raises a very important matter. There has been a catalogue of challenges with IT projects down the years, most notably the NHS supercomputer, which reportedly cost the Government of the day about £13 billion and never worked. We had IT challenges with regard to police and fire control centres—again, the system never worked and was finally aborted. We do have to be careful and cautious, as the hon. Gentleman points out. The measure in the Bill, however, will not lead to a full-blown programme, but will enable HMRC to carry out the early design work and engagement to develop proposals for how that particular principle of providing digital services can be developed. Given the spirit of my explanation, I hope the hon. Gentleman is reassured that this is about early design and engagement rather than entering into a full-blown IT project which, as he rightly pointed out, can often be challenging.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clause 15
Power to impose infrastructure supplements
Question proposed, That the clause stand part of the Bill.
Mr Thomas
I support the clause, but will the Minister give some clarity on what seems to be an unfolding situation with a vital piece of national infrastructure: Crossrail 2? According to a report in yesterday’s Evening Standard, Government insiders—we do not know whether they were called Nick on this occasion—revealed concerns about stumping up half the current £30 billion, claiming that Ministers were going cold on the idea. The remainder of the approximately £32 billion cost would be funded by London fare payers, taxpayers and London businesses.
We know that the previous Chancellor, before the current Prime Minister sacked him for incompetence, gave a green light in last year’s Budget but, sadly, without a detailed plan for funding, timing or legislation. You will know, Sir David, that Crossrail 2 would increase the capital’s rail capacity by 10%, bringing an extra 270,000 people into central London while cutting journey times at the same time.
In the context of London’s expected rising population of 1 million over the next 10 years, more investment in London’s infrastructure is clearly hugely important. Data have been released to try to persuade Ministers to continue with the previous Chancellor’s commitment, with the suggestion that without Crossrail there will be a meltdown at a minimum of 17 stations across the tube network. In the context of clause 15, can the Minister give any reassurance to a former Member of this House, now our excellent Mayor of London, Sadiq Khan, that the Government will continue to stump up their 50% for Crossrail 2?
Mr Jones
The Government are paving the way for the election of combined authority Mayors. They will be the focal point for delivering real economic benefits across their areas. Six areas are preparing to elect Mayors in May. This means that, subject to parliamentary approval, a third of people in England will have a directly elected Mayor, like the Mayor of London, on the principle that they will create jobs, improve skills, build homes and make it easier to travel across their areas.
While I am on that point and in response to the hon. Member for Harrow West, the business rate supplement for Crossrail is expected to generate income of about £4.1 billion towards the total estimated cost of that project of £15.9 billion. It is difficult for me to comment on speculation and supposition, particularly from an unnamed and unverified source, so I will not enter into that today, apart from saying the Government have positively supported the Crossrail 2 project from the outset.
The Mayors will work with partners across their areas to bring a louder voice, strong co-ordination and clear accountability for local people. They will be responsible for driving economic growth and regenerating their areas. We are devolving specific power and budgets to help them to achieve just that. One key way that Mayors will deliver on that is through strategic investment in infrastructure. Each mayoral combined authority has a long-term investment fund of up to £36.5 million a year. To boost that investment, we want to give Mayors a powerful fiscal tool to raise up to 2p in the £1 to invest in infrastructure that will benefit local businesses and the broader community. The clause sets out that relevant authorities can impose a settlement and confirm who will be subject to it and for what kind of project it can be used.
Mr Jones
I hear what the hon. Gentleman says, but I was talking about a combined authority area, not an individual authority area.
We must not lose sight of the other options available to councils for delivering additional benefits to and growth in their areas, though we seem to have done so to an extent in this debate. For example, business improvement districts may be established in every area of England. The Bill also includes provision for property-owner business improvement districts throughout England, not only in London. Going back to the point about elected Mayors in individual authorities, we already have provisions enabling the introduction of a business rates supplement to the levy for investing in projects that promote economic growth and development. Councils already work with businesses using existing resources to deliver a positive economic environment. The local growth fund is another mechanism used by local enterprise partnership areas and local authorities in that regard.
Having reflected on the points that I have made, I am not sure that I will completely convince the hon. Member for Oldham West and Royton, but I encourage the Opposition to withdraw the amendment.
Mr Jones
All I can say is that we are damned if we do and damned if we do not. If we do not offer up significant funding streams to support projects for local areas, Opposition Members criticise the Government. When we do offer up significant funding—the £2.3 billion in the housing infrastructure fund is indeed significant—we are again criticised, so I am not sure what the Opposition want. I would encourage areas, as I hope the hon. Gentleman will encourage his area, to look to the fund to unlock new housing that is badly needed across the country.
Having reflected on the points that have been made, I am not convinced that amendment 44 is worth supporting. I therefore ask the hon. Member for Harrow West to withdraw the amendment.
Mr Thomas
I have heard what the Minister has said. I have also heard the response of my right hon. Friend the Member for Wentworth and Dearne (John Healey), who speaks on housing for Her Majesty’s loyal Opposition, who described the housing White Paper, quite accurately, as less a White Paper and more a white flag. That encapsulates the reality of the Conservative party’s approach to housing. The Minister has missed an opportunity by rejecting amendment 44 out of hand, but I do not seek a Division on the amendment at this point, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Local Government Finance Bill (Seventh sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Mr Jones
I remind the hon. Gentleman, who probably knows this but chooses not to say it, that if a particular local authority in an area that was affected by the challenges in the steel industry wanted to reduce and give a discount on the business rate to a steel plant, for example, that option already exists. Will he acknowledge that?
Mr Thomas
I accept that the option exists in certain places in certain situations. What we are seeking to do is to end the inflexibility of the provisions as they stand at the moment. I gave the example of counties and the particular problems they have in relation to this power. This flexibility would allow local authorities that do not benefit from the presence of an enterprise zone or sites with assisted area status to still offer some form of incentive to business investment.
Mr Jones
The hon. Gentleman is being very generous in giving way. He mentions the issues that counties have. Counties can give discounts, but those discounts are dealt with by the billing authority, which is generally the district in a two-tier area. Will he set out exactly what the concerns are and what the county issues are that he mentions?
Mr Thomas
I am doing my best to do so; the Minister may not be listening as well as he might like to. Let me give some additional background to the concerns that have been put to me.
Schedule 2 gives the power to districts, counties and the Greater London Authority to reduce the business rates multiplier, but as it stands it must be applied to all qualifying properties that pay business rates hereditaments in its area. I am told that authorities would welcome having more flexibility. For example, an authority may wish to reduce business rates in a particular area or to help a particular industry.
There are current powers under section 47(5A) of the Local Government Finance Act 1988, as amended by the Localism Act 2011, to grant discretionary relief to any ratepayer. However, they apply only to billing authorities —so not counties or the Greater London Authority —and are determined on a case-by-case basis, as the authority may grant a discount only if it is satisfied that it would be reasonable for it to do so, having regard to the interests of persons liable to pay council tax.
Mr Thomas
I was sufficiently shocked by the sight of a Government Back-Bench Member rising that I did pay attention, but it is possible that, as events have moved on, I cannot recollect every aspect of the hon. Gentleman’s contribution. As punishment, I will go back and re-read it. He makes a partially interesting intervention—if he will forgive me for saying so. He is right: the challenge across the country for future businesses and economic growth is to take the entrepreneurial spirit that leads to the establishment of small businesses in the first place and to turn those into medium-sized businesses and, ultimately, bigger businesses.
Increasingly, as my hon. Friend the Member for Oldham West and Royton made clear, we are seeing more of those small businesses that are successfully transitioning into medium-sized and bigger businesses not needing the size of property that would lead to the increase in business rates income in the way that this Bill implies will be the only way for councils to generate increased business rates income in the future. There is that constraint, plus those that the hon. Member for Waveney alluded to and the barriers that I set out when I took the Committee to Allerdale Borough Council in Cumbria, with the mountains and lakes of the Lake district being natural barriers to economic growth.
We are now privileged to have the hon. Member for Thirsk and Malton with us. He will be delighted that, in a spirit of tribute to him and the hon. Member for Northampton South, I am moving a probing amendment that grants—as he and other members of the Select Committee wanted—the power to raise business rates so that that is included in this legislation. I look forward to hearing the case for raising business rates from the hon. Gentlemen.
As my hon. Friend the Member for Oldham West and Royton alluded to, one can foresee the social care crisis being so severe, and the worry about individual families’ circumstances being so great, that council leaders and councillors up and down the country will not want to go beyond a 1%, 2% or even 0% increase in council tax. However, they might want to look at the big businesses based in their area and potentially increase business rates as a source of income to pay for vital public services.
In the evidence given to the Committee by the chairman of the Federation of Small Businesses, we heard of his desire to see local authorities properly funded, so that the range of discretionary services that councils can offer when they have the resources, and that help businesses, can be available. The Minister’s most recent intervention on car parking charges was interesting. The chairman of the FSB noted in his evidence to us that one reason local authorities raise parking charges is that they have few alternative ways of raising revenue.
Mr Thomas
Given that that we do not wish to put the amendment to a vote, I have not sought support for it.
I return to the contributions made to the Select Committee report by the hon. Members for Thirsk and Malton and for Northampton South, who supported the power to raise business rates. Labour Members do not go as far as those hon. Gentlemen want us to, but their enthusiasm for raising business rates returns us to a broad point: where and how does one increase the quantum of local authority funding, if one wants the people of England to have the good-quality public services that they deserve? We have noted with considerable concern the impact that the decline in revenue support grant has had on rural bus services, public services and policing. If they do not have the power to raise business rates, I suspect that more and more councils will want to increase council tax as a way to fund public services.
The motivation for amendment 46, a probing amendment, is to note the difference between what can happen to empty property rates in Scotland and Wales, and what can happen in England. Councils in England can charge up to 150% on properties that have been unoccupied and substantially unfurnished for more than two years. In Scotland, they can charge up to 200%, and the qualifying period is only a year; Wales has similar powers. It would be interesting to hear from the Minister the reason for the difference. In Britain’s best constituency, Harrow West, the old post office site in the town centre has been empty for the better part of 10 years. Perhaps if empty property rates were set at the same level as those in Scotland, the developers who own the site would have more enthusiasm for accelerating their use of the planning permission that they have for it.
Mr Thomas
My hon. Friend is absolutely right. We in Harrow are increasingly concerned about the time that it is taking the developer to bring the site back into use. Perhaps the Scots and the Welsh Labour Administration have got the rate of empty property relief right. I would be interested to hear from the Minister on that. These are probing amendments, and in that spirit, I look forward to the Minister’s response.
Mr Jones
It is always a pleasure to respond to the hon. Gentleman’s amendments. Clause 6 provides a power for authorities to introduce a multiplier discount, to incentivise businesses to invest in their areas and to stimulate local economic growth. Amendment 45 would introduce a wide-ranging power for the Secretary of State to provide in regulations for a local authority to be able, under certain circumstances, to raise the multiplier for its area. I understand the hon. Gentleman’s intention, but I am afraid that I do not agree that his approach is right, or that there is a justification for giving, or a need to give, local authorities a general, unfettered power to generate additional income by raising taxes on businesses.
Local authorities already have a range of more specific powers to raise additional income from businesses where authorities are delivering a specific improvement to the benefit of the local economy, including through business improvement districts and business rate supplements. In addition, the Bill would provide for a new infrastructure supplement for Mayors of combined authorities. These powers rightly include additional measures to ensure the effective engagement of businesses, and the additional income generated goes towards delivering specific improvements to benefit local businesses. Amendments 45 and 46 contain no such assurances or protections for business. Instead, they would allow local authorities to increase business rates without such checks and balances.
Amendment 46 would give the Secretary of State a wide-ranging power to make provision for a local authority, under certain circumstances, to increase the multiplier specifically for unoccupied premises. However, owners of such properties are already subject to full business rates, subject to the exemptions that may apply. The amendments would provide local authorities with powers to add additional costs to owners, who may not be receiving any rental income. That would be unnecessarily punitive and of very limited benefit.
I am therefore certain that the amendments would not be supported by the business community, and Labour Members offered no evidence to suggest that they would be. We need to provide business with the certainty it needs over rates bills, while allowing more flexibility for local government, for example through the new multiplier flexibilities. I hope that Labour Members will recognise the balance that we have struck in the Bill for business and local government. In that spirit, I hope that they will withdraw the amendment.
Local Government Finance Bill (Sixth sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Mr Thomas
I am grateful for your guidance, Sir David. I will leap forward and give one specific, tangible example of the concern that motivated me to table amendment 31. In 2015, Lancashire County Council commissioned a report by PricewaterhouseCoopers to look at the level of resources it needs to provide statutory services going forward. That report makes sobering reading. It forecast that even if the council achieved everything in its saving plans, it would have an in-year deficit of £148 million in 2020-21 and a cumulative deficit of £398 million.
The report identified several areas in which planned savings were at risk of slipping and not delivering the full range of savings, meaning that the forecast budget gap would be even greater. That example of Lancashire County Council and the independent work by PricewaterhouseCoopers on whether it could continue to fund its statutory services in the future surely cuts to the very heart of the case for amendment 31.
Given the scale of spending cuts that councils have experienced and the sheer number of councils in all parts of the country and of all colours that have outlined their views, councils are under huge pressure. I gently suggest that Ministers cannot continue to press ahead without a significant change in direction and recognition that a central part of the new 100% business rates retention scheme should surely involve putting local councils on a sustainable financial footing. That is the context in which I make the case for amendment 31.
If Ministers are not convinced by the example of Lancashire County Council, let me give the example of Nottingham City Council. Councillor Jon Collins gave evidence to the Committee and made clear the scale of the cost pressures affecting the council—£11.2 million of cost pressures, wage demographics, additional inflation and charges from providers. He talked about the extra funding and pressure on his budget and raised a comparison with a nearby local authority—Rutland. He noted that the spending challenges facing his authority in Nottingham were substantially less than those facing nearby Rutland.
Clearly, amendment 31 might help to persuade Ministers to iron out such difficulties if there was a proper assessment of need. That is the spirit in which I tabled amendment 31. I hope the Minister might now be willing to be more careful with the future of local authority finances. Amendment 31 would be a sensible additional safeguard.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship, Sir David. I thank Opposition Members for the amendment, which provides an opportunity to set out the Government’s position on the future sustainability of local government. Before turning to the amendment, I would like to take the opportunity to clarify that medium-term fiscal policy decisions in the United Kingdom are managed, as the hon. Gentleman knows, through spending reviews. The spending review in 2015, for example, set local government expenditure limits to 2019-20. The Government will continue to assess the funding of local government after the introduction of 100% retained business rates through spending reviews.
Mr Thomas
Given the concern about how tariffs and top-ups and distribution of resources will take place between local authorities, will the Minister give a bit more clarity on the criteria for the distribution of that homelessness funding? Will it be guided by the index of multiple deprivation? How will Ministers be guided in terms of the distribution of that finance?
Mr Jones
The hon. Gentleman raises a good question. As was made clear in Committee and, if I recall correctly, on Report of the Homelessness Reduction Bill, a clear commitment has been given by the Government to work with the local government sector, particularly the LGA, on how that funding will be distributed to reflect need. As the hon. Gentleman will know, the spending review process and a number of different processes will follow from the Bill. The Government also take the position that they will work with local authorities and their representative bodies to come to conclusions, particularly on the quantum of funding required and how it is distributed.
Amendment 31 would require the Secretary of State to assess whether each local authority has sufficient resources to provide statutory services in its area. Our concern with the amendment is that it replicates what is rightfully a matter for the Government to consider through a spending review. Furthermore—the hon. Gentleman alluded to this point—the fair funding review will consider the suitable distribution of funding across local government.
I hope I have reassured hon. Members that the Government will continue to consider the level of funding for local government. I therefore ask the hon. Gentleman to withdraw the amendment.
Mr Thomas
I listened carefully to the Minister and take his point about the fair funding review. I would gently suggest to him that that is discretionary, although it is a pivotal element to this particular measure and is one of the parts that will come sometime in the long-distant future to inform us how 100% business rates devolution will work in practice. What we do not know is whether there will be a fair funding review in future if there were to be another Conservative Government. We do not know whether there would be a spending review in future —they are entirely at the discretion of the Government.
Amendment 31 would lock into law the requirement to produce that assessment. In the context of such a radical transformation, to use the Minister’s words, of local government finance, the additional duty on the Secretary of State seems like a sensible precaution to put in place. Much as I would like to accept the assurances from the Minister, I fear that I cannot, and I intend to put amendment 31 to the vote.
Question put, That the amendment be made.
Mr Thomas
As you can see, Sir David, the hon. Gentleman is a passionate advocate for redistribution away from London. We have tried to convince him to get underneath the detail of the scale of need in London, but clearly we have been unsuccessful today. A little progress is needed. I have made the point that I wanted to make. I look forward to the Minister’s answer, and the response of my hon. Friend the Member for Oldham West and Royton.
Mr Jones
I thank the hon. Members for Harrow West and for Oldham West and Royton for the amendment, and for the opportunity to set out why we want to remove levy payments. As the hon. Members have explained, the amendment would retain the Government’s ability to make regulations requiring a levy. As we set out when we announced our intention to move to 100% rates retention, we do not believe that imposing a levy on growth is desirable; nor is it necessary for the purposes of funding the safety net. Through rates retention, we want to encourage and incentivise authorities to work with their businesses and communities to deliver economic growth. We want them to use their powers, through the planning system and more widely, to support development and create the conditions in which business can thrive. Where they do so, we want to allow authorities the benefit of all the growth in their business rates that will follow.
Mr Thomas
That is the first bit of clarity about how the pilots are working—I was going to ask what the safety net was in context. I simply praise the Minister for giving just a tiny fraction of information about how the pilots are going to work. It would be nice to have the rest of the information before the end of the Committee.
Mr Jones
Such are his high standards, indeed.
Getting back to the real world, I add that amendment 34, by reversing the Bill’s removal of sub-paragraphs 25(2) and (5) of schedule 7B to the Local Government Finance Act 1988, would make it impossible to deliver changes for which local government has asked. The changes we want to make through the Bill mean that, in future, safety net payments need not be made at the end of a financial year. Instead, as with other payments under the scheme, they can be made at the beginning of the year, based on the estimates, and then reconciled at the end of the year once outturn figures are available.
Authorities asked us to make that change as soon as a legislative opportunity arose. The changes made by the Bill have no material effect on what authorities will receive in safety net payments; they simply change the way in which we account for them. I hope that resolves some of the concern of the hon. Member for Oldham West and Royton.
In conclusion, the amendments, if allowed to stand, would remove the flexibility that we and the local government sector need to design a safety net regime that is fit for the needs of 100% business rate retention. They would reverse a change that local government welcomes and for which it has long called. I hope that, with that explanation, the hon. Gentleman withdraws amendment 32 and does not move amendments 33 and 34.
Mr Jones
I will in a moment.
Throughout our deliberations on the Bill, it is apparent that local authorities have asked for fairness within the system. The challenge is whether that fairness is apparent if a local authority is excluded from a pooling arrangement because surrounding local authorities do not want to include it. Clause 3, which the Committee will consider later, provides an additional tool to strengthen the role of pools to help secure economic growth, with rewards being shared across the pool.
Amendment 28 aims to ensure that Parliament has a role in revoking a business rates pool—paragraph 26 of schedule 1 enables the Secretary of State to revoke the designation of a business rates pool. Revoking a business rates pool is a technical matter, working with the authorities involved to consider how each one operates independently. The Government are concerned that requiring every decision about revocation of the business rates pool be taken through each House and made subject to consultation with the Communities and Local Government Committee would take up valuable parliamentary time. The current process for revoking a business rate pool does not require parliamentary approval or consultation with the Select Committee. The Government do not believe that change is needed.
Mr Jones
As I have said many times in this Committee, in real terms council tax is currently 9% lower than it was in 2010. I do not intend to take any lectures from the hon. Gentleman, bearing in mind that council tax doubled between 1997 and 2010 when his party were in power. I am not too sure that I will be blown off course by that advice.
The referendum principles report is not intended to provide an analysis of local authority need, its success in achieving efficiencies or an account of any other matter. It is a technical instrument to set the parameters by which a referendum might be triggered. As Members will be aware, the Bill creates a new requirement to consult representatives of local government before principles are set. That will allow the sector to make representations about their circumstances and needs before the Secretary of State makes his or her final decisions, whatever the future holds. That will be more useful to local authorities than prescribing the content of a referendum principles report.
Mr Thomas
I made clear that this was a probing amendment. The Minister could have given some sense to local government that he understood the scale of funding difficulties it faces by 2020. He chose not to. He could have praised councils such as Harrow that have led the way in terms of a more efficient offer, but he chose not to. I do not intend to make a thing of it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Thomas
Let me be brief, because we have had quite a trip around the issue of scrutiny of local government finance. Amendments 21 and 22 simply provide the House of Commons with the opportunity to scrutinise local authority finance. The Minister, as we know, does not want the scrutiny of a local government finance settlement, so perhaps he and Government Members might be willing to support the idea that new council tax excessive thresholds should have to be approved by the House of Commons. That is the spirit of the amendments.
Mr Jones
The amendments would require council tax referendum principles and alternative notional amount reports made by the Secretary of State to be approved by the House of Commons. I appreciate the hon. Gentleman’s wish to retain the current practice of requiring the reports to be laid for approval. However, I believe that it is not necessary in a new era where we seek to offer certainty and where there will no longer be a local government finance settlement handing out resources following the approval of the House.
Mr Jones
The clause aligns the process for setting council tax referendum principles with reforms to the wider local government finance system under schedule 1 to the Bill. It will enable the Government to offer local authorities far more certainty about their future financial position by setting referendum principles for multiple years.
Chapter 4ZA of the Local Government Finance Act 1992 allows the Secretary of State to determine a set of principles for each financial year, which local authorities in England must use to determine whether their council tax increase is excessive. Under existing legislation, the principles must be set out in a report and approved by the House of Commons by the time that it approves the annual local government finance report. Where no principles are set, the Secretary of State must lay a report before the House explaining why.
The Government defining an “excessive increase” has been part of the council tax system for decades. As I said to the hon. Member for Oldham West and Royton, council tax in real terms has been 9% lower than it was in 2010-11; it will still be lower in real terms in 2019-20, but only if Government continue to work with local authorities and maintain a referendum threshold, as we promised in our 2015 manifesto.
Local authorities must determine each year whether they have set an excessive increase as soon as reasonably practical after the principles have been approved. Where an authority’s functions or structure have changed, the Secretary of State may set an alternative notional amount to enable a like-for-like comparison to be made with the council tax set in the previous financial year. That must also be set out in a report and be approved by the House of Commons.
The clause amends sections 52ZB to 52ZE of the 1992 Act. The provisions introduced by clause 4(2) mean that when setting council tax for the first year to which the principles report applies, local authorities must determine whether it is excessive as soon as reasonably practicable after the report is made. In other years, they must make the determination as soon as reasonably practicable after they have made their council tax calculations.
Subsection (3) changes the processes of determining council tax referendum principles and alternative notional amounts. In particular, it allows the Secretary of State to set the principles over multiple years, providing councils, police and crime commissioners, fire authorities and the Greater London Authority with welcome clarity about their council tax income.
The Secretary of State is required by subsection (6) to finalise the principles before the beginning of the first financial year to which they apply. The provisions introduced by subsection (8) mean that he must also send a copy of that report to each billing and major precepting authority, and publish it in an appropriate format, to bring it to the attention of other authorities that may be affected. Separate reports may be made for different categories of authority for the same year.
Mr Thomas
Has the Minister been privy to any conversations within the Department for Communities and Local Government, or across Whitehall more generally, about Surrey County Council’s proposed 15% referendum, and what the Government might have said to the leader of Surrey County Council to persuade him not to go ahead with that referendum?
Mr Jones
That probably takes me slightly wider than the scope of the Bill. I think that the hon. Gentleman is presupposing the discussions that happened and the outcome of the situation. It is more likely that Mr Robert Evans had more of an effect, as he said was the case; perhaps he will be the next leader of Surrey County Council, although that is about as likely as the right hon. Member for Islington North (Jeremy Corbyn) becoming the next Prime Minister, which many of us believe is not very likely.
Moving on, clause 4(8) also allows referendum principles to be amended by making a further report to replace a previous one. That must be done prior to the start of the first financial year to which the new principles apply. Finally, subsection (13) means that authorities subject to a proposed alternative notional amount must be consulted and receive a copy of the final report, which must be made prior to the start of the financial year in which it will have effect.
In conclusion, this measure will enable Government to provide local authorities with greater certainty about their future council tax income, and complements other provisions in this Bill.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Power to specify indexation rate for non-domestic rating multipliers
Question proposed, That the clause stand part of the Bill.
Mr Thomas
In passing, I thank the Minister for his praise for the campaigning efforts of Robert Evans, and his support for Mr Evans’s re-election campaign.
I do not intend to encourage the Committee to object to the clause standing part of the Bill, but I want to mention some of the unintended consequences of the former Chancellor’s suggestion that in 2021, the retail prices index be replaced by the consumer prices index when it comes to uprating business rates. As we have said in earlier debates, that will potentially cost local councils some £370 million in 2020-21 alone. Ministers have given no indication of the cost in future years, but those outside Whitehall and this place who know their local authority finances have calculated that over 10 years, as a result of the decision, there could be a £3.3 billion windfall for the business community and a £3.3 billion loss to the people of England who want good services to be provided.
Mr Jones
The Government have committed to changing the indexation measure used in the calculation of business rates—currently the retail prices index—to bring it into line with the main measure of inflation, which is currently the consumer prices index. The clause therefore amends schedule 7 to the Local Government Finance Act 1988 and introduces a new power for the Treasury to alter through regulations the inflation measure used in the calculation of non-domestic rating multipliers. The measure was part of the £6.7 billion rates reduction package announced in the 2016 Budget. It represents a rate cut every year from 2020. It will be worth £370 million in 2020-21 alone, and the benefit will grow significantly thereafter. Those savings would help businesses to grow and support local economies.
To pick up on the point made by the hon. Member for Wolverhampton South West, the clause provides the flexibility to set the appropriate measure of inflation through regulations. However, any changes would be subject to House of Commons approval; I hope that gives him some reassurance. We are working with local authorities on the reforms to business rates to allow the sector to keep 100% of their rates. We will also consider how future changes to the indexation rate impact on the reforms, and we will respond to ensure that the financial sustainability of local government is not adversely affected.
Mr Jones
As I said to the Committee, we are certainly considering how future changes to the indexation rate will impact on the reforms that we are making. We have been clear that we will respond to ensure that the financial sustainability of local government is not adversely affected as a result of the change to the indexation rate on the business rate multiplier. I hope that the clause stands part of the Bill.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Jackie Doyle-Price.)
Local Government Finance Bill (Fifth sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Chair
I do not have any information at all, but if anyone does perhaps they can inform us.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
Further to that point of order, Mr Gapes. I have made it clear to the Committee, including when I gave evidence, that we will shortly bring forward a summary of the responses to the consultation. We will certainly do that.
Schedule 1
LOCAL RETENTION OF NON-DOMESTIC RATES
Mr Thomas
I beg to move amendment 24, in schedule 1, page 33, line 13, at end insert—
“(1D) The principles of allocation statement must be approved by a resolution of the House of Commons.
(1E) In the year prior to any reset of the Business Rate Retention Scheme a principles of allocation statement must be approved by a resolution of the House of Commons.”
This amendment, together with amendment 25, would require a principles of allocation statement to be approved by the House of Commons. Subsection (1E) would in particular require a principles of allocation statement to be approved by the House of Commons in the year before any reset of the Business Rate Retention Scheme.
Mr Thomas
It feels a little like the morning after, and I cannot promise to wake up Members and act as caffeine, as I usually like to try to do after a late night. The amendments are about parliamentary scrutiny. In a sense, last week’s proceedings were an hors d’oeuvre to the main course: the case for ensuring that there is proper parliamentary scrutiny of local government finance.
Last week the hon. Member for North Swindon made an enlightening contribution to the Government’s case. It is a pity that the Minister could not achieve the same heights. Given that the hon. Gentleman for North Swindon works closely with the Whips, what he said was revealing, and this is why parliamentary scrutiny matters. He did not have much interest in the case for redistribution of local government finance, and foresaw a new Jerusalem as economic growth incentives kick in.
To be fair to the Minister, there was a small benefit in terms of parliamentary scrutiny when he revealed, after much mulling over, that any local authority that cut its multiplier in the future would not be entitled to any top-up under the new system. I suspect that that means that few local authorities will rush to cut business rates.
Those two small indications—the Government mindset, which the hon. Member for North Swindon helped us to understand a little better, and the Minister’s indication of how future arrangements underpinning the Bill will work—serve as a reminder of the importance of continuing parliamentary scrutiny, which is what the amendments would help to embed in the Bill.
It may be worth reminding the Committee how accountability to the House of Commons is envisaged under the Bill. Paragraph 7 of schedule 1 repeals the requirement to provide a local government finance report that must be approved by the House of Commons. Instead, under paragraph 12 the Secretary of State will be required to publish a principles of allocation statement, which will set out how the tariff and top-up levels have been calculated. Everyone expects that that will substitute for the local government finance settlement.
Under the Bill, the Secretary of State could publish a principles of allocation statement covering several years at once. Indeed, the requirement to publish a statement annually is abolished by the Bill. Paragraph 15 of schedule 1 provides that an amending statement may be made, and again that would not have to be put to the House of Commons for approval. That amending statement allows for tariffs and top-ups to be altered retrospectively up to a year after the financial statement, so presumably the tariff and top-up could in the most dramatic cases be axed completely. I grant that there has to be a consultation with local authorities, but in theory dramatic change to local councils’ spending power could be the result of such retrospective change.
The amendments stand in my name and that of my hon. Friend the Member for Oldham West and Royton. Amendments 24 and 25 would require the principles of allocation statement to be approved by Parliament in the same way as the existing local government finance report. Similarly, amendment 26 would require that any amending statement to the principles of allocation statement would need approval by the House of Commons.
Why on earth would Parliament want to ensure scrutiny for local government finance in future? There is a series of reasons, which I will take a little while to explore. A House of Commons occasion such as the local government finance settlement provides a moment for change whereby the Executive can be held to account for their performance, or lack thereof. That is crucial. For example, the issue of social care has been debated in many guises, both by this Committee and by the House, and last September’s local government finance statement provided an important opportunity to scrutinise the Department for Communities and Local Government on its handling of the social care crisis.
There is also the question of how local government finance should be scrutinised. Should it be done purely by Members of Parliament seeking to discuss their individual local authority’s situation through a Back-Bench debate? There is of course a case for that. I had the pleasure of taking part in a debate on the local government finance of midland authorities, including Birmingham. My hon. Friend the Member for Coventry South (Mr Cunningham) also took part in that debate.
The role of individual Back-Bench MPs in securing an Adjournment debate and fighting their local council’s corner will always be an important way of scrutinising local government finance. Before I returned to a Front-Bench post, I, too, sought to do that, on a number of occasions raising the difficult financial situation of Harrow Council. Before my hon. Friend the Member for Oldham West and Royton joined the Front-Bench team, I had the pleasure of hearing him fight the corner of his local authority of Oldham.
Under reforms to Parliament, Back-Bench MPs on both sides of the House now have the opportunity to work together to secure time—usually on a Thursday and sometimes in Westminster Hall—for a particular subject to be debated. I pay tribute to the hon. Member for Thirsk and Malton for his support in securing a Back-Bench debate on maternity discrimination. Perhaps it would also be legitimate for Back Benchers to work together to secure debates on issues relating to local government finance.
Her Majesty’s Opposition might want to use one of our Supply days to focus on local government finance. Indeed, in this session we have already used one of our Supply days to highlight the problems of social care. The Communities and Local Government Committee has done excellent work looking at local government finance. I will come back to that. Yes, there is a role for Back Benchers, for the Select Committee and for Opposition-led debates, but surely an annual debate on the state of local government should be timetabled in the House. Without our amendments, I fear that that opportunity will be lost.
Mr Thomas
I appreciate the fact that the Minister may have had too much caffeine in the wake of very few hours’ sleep, but I encourage him to be patient. I will come to the merit of the amendments and what they seek to achieve.
I would not have thought that the Minister was naturally frightened of appearing before the House, although he has a track record of getting things wrong. He was recently a member of the Standing Committee that considered the Housing and Planning Bill, which tried to introduce a pay-to-stay scheme. Our parliamentary scrutiny in that debate helped to begin the process of getting Ministers to cave in and to recognise that they were wrong. There is a strong case, not for less parliamentary scrutiny, as the Minister envisages with this Bill, but at least for maintaining, if not increasing, the scrutiny of local government on the Floor of the House.
Mr Thomas
Of course I would support a fairer system. I think of the ways in which the system is not fair in relation Harrow council’s finances—£80 million plus of cuts in the last four years. I wonder how that is fair.
The exchange that the hon. Gentleman and I have had about fairness is an entirely reasonable debate. I simply think it should be had on the Floor of the House on an annual basis on the local government finance settlement.
Mr Thomas
I will give way to the Minister. I have not forgotten him. I am trying to but not succeeding.
We should have that debate on fairness in local government finance, and on how spending power is allocated across local authority areas, on a regular basis, and ideally on an annual basis, when we debate the local government finance settlement. I cannot understand why it should be abolished before the new system comes in. When there is a principles of allocation statement or an amending statement, surely that should provide the hook for a debate on the Floor of the House of Commons about fairness and a series of other issues related to local government finance.
I will give way to the Minister before I come back to Suffolk, which I know will be of interest to the hon. Member for Waveney.
Mr Jones
With his usual charm and wit, the hon. Gentleman decided to go off on a tangent and talk about coffee rather than answer my earlier question. He still seems to want to back two horses. Does he want an annual vote, or does he want a vote to set the principles at the start? His amendment says one thing, but he seems to be speaking another language at the same time. What does he actually want?
Mr Thomas
Given the sorry state of local government finance, I would be up for a debate every three months if it was going to lead to action on social care.
The point of the amendments, a couple of which are probing amendments, is to explore the issue of scrutiny by the House of Commons. The Minister—let me be generous to him for a second—in responding to an intervention by the Chair of the Communities and Local Government Committee on Second Reading appeared to hint that he might be willing to look at this question. I gently encourage him to do so.
There is a long tradition of Members of Parliament raising the concerns of their local authorities, be they North Yorkshire, Thurrock, Torbay or wherever, on the Floor of the House when we debate the local government finance settlement. I hope the Minister has some respect for local authorities and for the role that this great House plays in helping local government to ensure that there is a regular opportunity for scrutiny of local government finance.
I was dwelling on the authorities of the hon. Member for Waveney as part of the case for such ongoing scrutiny. If the situation in Waveney is bad—this time last year, Waveney was extremely worried about its ability to survive and prosper—the situation for Suffolk is surely as dramatic. The local government finance settlement for Suffolk suggested that it was set to lose more than £73 million in revenue support grant between 2015-16 and 2019-20, and that it was gaining only just over £9.3 million under the system of 50% devolution of business rates.
Suffolk County Council will clearly recognise that more responsibilities are coming its way in the brave new world of 100% business rates devolution. I suspect it will be sceptical that it, like Waveney, can generate significant additional business rates income. If it is getting only £9.3 million under 50% business rates devolution, it seems unlikely that it will be able to get anywhere close to the £73 million in revenue support grant that it has lost or is going to lose by the end of this Parliament.
Let us take an extract from the January 2017 cabinet meeting of Suffolk County Council on 24 January, where that Conservative council says:
“The Council should be under no illusion that the future financial outlook continues to be extremely challenging and deep ‘cuts’ to services will be required to remain viable even with a future general council tax increase.”
Among its proposals were cuts to libraries and archive services; culture, heritage and sport facilities in Suffolk; children and young people’s services; the travel support budget for children and young people; help for local schools with their budgets; public health; and housing. That is the scale of financial difficulty Suffolk County Council faces.
I have a suggestion for the hon. Member for Waveney, who I know will be as concerned about the financial situation facing Suffolk County Council as he is about the one facing Waveney District Council. His leverage as a Member of Parliament will be weakened if Parliament does not have to approve the principles of allocation statement. If there is not an opportunity on the Floor of the House of Commons for a debate, he might be able to persuade Mr Speaker to grant a Back-Bench debate on the finances for Waveney or Suffolk councils or both. He might be able to persuade Opposition Members to come together to look at the local government finances facing the east of England for a Back-Bench debate. He might even be able, if he whispers in my ear, to persuade the Opposition on occasion to use one of our Supply days for a debate on local government finance. Those are all good things in their own right. However, his leverage as a Member of Parliament for his two authorities will be weakened by the provisions in the Bill and the loss of parliamentary accountability envisaged in it. I gently suggest to him that that is surely negative and that he might want to use his considerable influence and charm on the Secretary of State to persuade him to think again.
I want to dwell briefly on another issue linked to parliamentary scrutiny—the mandate for the changes. There was no indication in the Conservative party manifesto. I hope the hon. Member for Torbay has learned the lesson of his experiences of intervening in debates so far—one should read what one’s opponents say before challenging them. I have read the Conservative manifesto—and what a dismal read it was. That is a part of my life that I will not get back. [Interruption.]
Mr Thomas
The hon. Gentleman is in danger of suffering from the same disease as the hon. Member for Torbay, and of repeating his question. Of course I am in favour of the principle of 100% business rate devolution. Indeed, we had it in our manifesto as part of a much bigger package of devolution than anything envisaged by the Conservative party. Perhaps the hon. Member for Thirsk and Malton, who has a reputation for hard work, would like to dig out a copy of the Labour party manifesto, where he can check the section on local government. I will happily pay for him to have a cup of tea with the hon. Member for Torbay so he can point out to him the passage about the increased spending power that councils would have had if Labour had been in charge.
Mr Jones
It is good to be back on the Committee with the hon. Gentleman. I have looked at the Labour party manifesto: there was a significant commitment to devolve additional responsibilities for additional funding, but did the former shadow Chancellor, who lost his seat at the general election, say there would not be a penny piece more for local government if the Labour party were elected?
Mr Thomas
I am struggling. I thought that I had helped the hon. Member for Torbay not to make that mistake. Hearing the Minister make the same mistake as a Back-Bench Member is too much. A £30 billion increase in revenue spending power for councils was the centrepiece of our manifesto for local authorities, together with an English devolution Bill.
Mr Jones
I thank the hon. Gentleman for his generosity in giving way. He seems to be criticising my hon. Friend the Member for Harrow East (Bob Blackman). Does he not know that during the settlement process this year, my hon. Friend brought in a finance officer from Harrow Council to discuss its settlement with me? I have not seen any evidence of the hon. Gentleman doing that.
Mr Thomas
I was not going to criticise the hon. Member for Harrow East (Bob Blackman), although the Minister almost provokes me to do so; I was merely suggesting that he might not want to criticise Harrow Council quite so much. I welcome the fact that he brought in the finance officer from Harrow Council. Indeed, I knew about that, and suggested that if I came along too I might upset the Minister inadvertently, so it was probably best for the finance officer to go in with just the hon. Gentleman. I deliberately stood back so as to try to ensure—[Interruption.]
Mr Jones
The Bill will provide the framework for a series of reforms to help local government boost local economies and become more self-sufficient and less dependent on Whitehall. This is a move away from a centralised state. The Bill will provide a clear framework in law for multi-year settlements, which will increase funding certainty and ensure that accountability for funding local services with local resources sits with local councils.
These radical changes require a new mindset. Under 100% business rates retention, there will no longer be a local government finance settlement to distribute central grants to support local services; local authorities will become more financially self-sufficient and will fund local services from local resources.
Mr Jones
The hon. Gentleman raises an interesting issue. If the country had the misfortune of another Labour Government—perhaps a discredited Labour Government, such as the one in the 1970s that went with a begging bowl to the International Monetary Fund—and inflation was soaring beyond belief, the Secretary of State might need to make some sort of amending statement to deal with the inflation and allow local authorities additional funding to deal with the mess that the Labour Government had again made. However, we are speculating, because I suspect it may be a little while before the Labour party is once again in a position to form the next Government.
Mr Jones
It is not for me to speculate on how often there will be a Labour Government. I do not think that I want to get into that this morning; I want to come back to the amendments and the Bill.
The amendments shift the focus back to Whitehall and Parliament by introducing a need for a resolution in the House of Commons, thereby jeopardising the move to more local accountability. The Government will be required to consult with local government on the principles for allocating funding over a period of years, and we envisage that whenever there is a reset of the business rates system, further consideration will be given to the allocation principles, in consultation with local government. Above all, it is important to provide as much certainty through this consultation as possible.
I am confused about the proposals, because on several occasions the hon. Member for Harrow West on the Opposition Front Bench has talked about a system of an annual vote, and about a vote at the start of the process to set the principles. He cannot have both things, but he seems to want to have his cake and eat it. I am worried that he is trying to undermine the principles of what the Government are trying to achieve.
Mr Jones
The point I was making to the hon. Gentleman is that I am rather confused about what he is looking for here. He has argued against the proposal he makes here and in favour of an annual vote in Parliament on this. There is very little clarity in his argument and, therefore, in what he is seeking to achieve by tabling this amendment, which seeks to undermine the principles of the Bill.
Mr Thomas
I hope in my closing remarks to deal with the fog of confusion that surrounds the Minister. It is the job of Opposition Members to ask questions of Ministers about the Bills they are bringing forward. The Minister needs to give us a justification for why the principles of allocation statement should not be approved by the House of Commons.
Mr Jones
I have spent some time in my contribution explaining that. It is always good to hear the hon. Gentleman speak from a sedentary position, like the archetypal school bully, but I will not take that to heart. I would never think he would do anything other than try to improve the discourse in the Committee.
Mr Jones
The hon. Gentleman mentions from a sedentary position tough love. With regard to his proposals, his version of tough love seems to be very confused. The point I am making, and the reason I urge him not to press the amendments, is that there needs to be far more clarity about what he is looking to achieve. What he suggests at the moment, particularly on having an annual vote—or not, as the case may be—seems to very much undermine the principles behind the amendments, so I ask him not to press them.
Local Government Finance Bill (Third sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
Further to that point of order, Mr Gapes. I would like to reassure the Committee that the responses to the consultation will be published shortly. I stand by the assurance I gave the hon. Member for Wolverhampton South West during the evidence session when I was a witness.
Mr Thomas
I am grateful for the Minister’s intervention. It would also be helpful to see soon details of how the pilot on 100% business rates retention schemes will work. That is germane to the passage of the Bill. I would also like an answer to a written question I have asked about an impact assessment setting out the economic effects of the scheme, which, again, is germane to the scrutiny of the Bill.
Local Government Finance Bill (Fourth sitting)
Debate between Gareth Thomas and Marcus Jones(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Jim McMahon
That problem relates to my earlier comment about the need for a transition period when aligning staff terms and conditions and salaries. The truth is that staff employed by local authorities and private social care providers are on significantly worse terms and conditions than those of their NHS counterparts who have similar responsibilities to them in hospitals.
The Government do not have an answer as to the number of care providers that could go bust. Councils will have a limited amount of money that they can pay, and some providers will decide whether they can remain in the industry. We do not have a solution if a significant number of those providers give up and pass the responsibility on to social care in the local authority. We cannot afford what we are doing today, and if they took such action we certainly could not afford the increase.
There is almost a double whammy: we want the local authority provision to be a decent place to live and a decent employer—because that is the state, and we want it to set the bar for a decent place. Not only are we telling private providers to pay the national minimum wage; we are telling them to pay between visits. It is not good enough that people get paid only for a 15 or 20-minute slot, and not while they are travelling to the next appointment. We have been pushing—good local authorities have been policing it—for their staff to be paid for their hours working on the job, including travel time. However, for some providers that has increased the staffing bill significantly, on top of national insurance contributions and the national living wage.
I have talked enough about social care. If I am honest, the Minister probably still has not been brought to the point of changing his mind about whether there is a crisis. However, I am satisfied as to my own experience in local government, as a member of the community with family receiving council services, and of listening to what is being said by professional social workers, the LGA, NHS England and, to be fair, Conservative council leaders. It strikes me that everyone accepts that there is a crisis—except the Minister, when he gave evidence to the Committee. I invite him today to put the record straight, face his responsibilities, accept that there is a crisis and commit today to doing something about it.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship, Mr Gapes. I thank the hon. Member for Harrow West for tabling the three amendments about the current central share of business rates income, and welcome the opportunity to discuss the important matters they raise.
To begin with amendment 1, removing the central share is essential to enable local government to retain 100% of locally raised business rates and to move away from its dependence on central Government and towards a more self-sufficient future. On Second Reading, the hon. Gentleman was supportive of the principle of 100% business rates retention, but his amendment would let central Government take a share of locally raised business rates income.
We have been working closely with local government, including doing significant work with the sector on developing the policy and on how 100% of business rates can be retained in local government. Keeping the central share would cut across the joint endeavour that the Government and the local government sector have embarked on.
The hon. Gentleman raised the principles of the fair funding review, the consultation response and further consultation. We have made it clear that it is a fundamental review of the approach to setting a baseline for 100% business rate retention. It is guided by the principles of fairness, simplicity and transparency, and we have been working in collaboration with local government in that respect. As the hon. Gentleman knows, we shall consult shortly.
Mr Thomas
The principles that the Minister outlines are all wonderful—who could possibly be against them?—but there is a touch of motherhood and apple pie about them. Will the index of multiple deprivation feature highly in the categories that the Minister has in mind for influencing how the fair funding review will play out?
Mr Jones
Last summer, we put out an open call for evidence from local government in order to get its views on that very type of issue. We have received its responses and we will provide them in due course. We have spent a significant amount of time today scrutinising this proposed framework legislation, and the hon. Gentleman will know that the detail of how the fair funding review will work, including with regard to redistribution and setting the baseline, will be dealt with at a later stage, when we have the time and information and have worked with the local government sector to put together a fair package. Many local authorities have responded to various departmental consultations in recent years by making it clear that they do not believe that the needs assessment, which was last looked at properly well over 10 years ago, truly reflects their demographics, because they have changed significantly since it was last done.
Mr Thomas
I entirely accept the Minister’s point about the needs assessment—it is entirely reasonable, in my view, that a new one be conducted—but there is a touch of mañana about his argument. He said, “The fair funding review will come in the fullness of time. Don’t worry about that. It will come in due course.” He could have submitted the Bill for prelegislative scrutiny; instead he is rushing ahead with it before any of the 450 responses have been published. Why is he so desperate to get the Bill through Parliament before we have had the chance to see the outcome of the fair funding review and a draft of the regulations?
Mr Jones
As the hon. Gentleman knows, this time last year the Government put out a four-year offer regarding the local government settlement to councils, 97% of which accepted it. At the same time, we made it clear that we would honour those commitments. We also made it very clear that we would be moving to a system of 100% business rate retention and that we would look at the fair funding situation. We made the timing of the move to the new system clear, and we have to have framework legislation in place to make that timing happen. Given that the fair funding review will be a significant piece of work and that we are going to look very carefully at need, we also need time to follow that piece of work through. So we need the legislation, and then we need to put the pieces of the jigsaw together to come up with a complete picture. I am sure the hon. Gentleman understands that.
Mr Thomas
I am grateful to the Minister for giving way. He often hides behind the four-year offers to local authorities when a difficult question is asked about the funding of local councils, but already the basis on which councils signed up to that four-year assessment has changed, because of the changes to the new homes bonus and the money being taken out for adult social care. I gently suggest to him that when it comes to completing jigsaws, it is helpful to have all the pieces to do so. At the moment, this Committee does not have all the pieces; we just have one third of them.
Mr Jones
The Government are committed to and have shown good faith in keeping to the agreement we made about the four-year settlement. Regarding the new homes bonus, which was not included in that settlement, we made it very clear at the time that there would be changes to it. In fact, this time last year we embarked on a consultation explaining that we wanted to sharpen the incentive in relation to the new homes bonus.
In addition, it was quite clear to local government at the spending review in 2015 that the new homes bonus would change, because the improved better care fund, which will total £1.5 billion by 2019-20, was intended to be funded by savings made from it. As such, changes to the new homes bonus have not necessarily been a shock to the sector.
Mr Jones
The point was that local government knew there was a challenge to be met and they knew they were not immune to the reductions in public spending. Coming back to the point, what local government had asked for for many years, above a lot of other things, was certainty. With the four-year deal we have given a significant level of certainty to local authorities that hitherto had always been hanging on the word of Government come December as to what their position would be when they set their budget for the following financial year, which would start at the end of March and take them through to early April. Generally, local government have welcomed that. As to whether they would want a quantum of money within the settlement, I am sure many local authorities would, but at least the deal has allowed local authorities to plan and to use other resources. For example, in many cases it has allowed them to use reserves to bring forward transformation plans that enable them to meet the challenges that they face.
Let me respond to the point that was made about two-tier authority areas by the hon. Member for Harrow West and the way in which the splits would be made in terms of income between the different tiers of local government. The amendment to retain the central share does not achieve that aim. How business rating can be shared between the tiers will be set out in regulations under part 4 of schedule 7B to the Local Government Finance Act 1988. We do not need to retain a central share to distribute business rates income between tiers of Government. As has been the running theme through this and I think will be a running theme in Committee, we are working with local government to work out how the split should work under 100% business rate retention.
Mr Thomas
To pursue another running theme, is there any sense of timing for when those draft regulations might become publicly available so that local authorities, not just those on technical working groups between the Department and the LGA but local authorities in all their full glory, can see and understand what those regulations might mean for their finances?
Mr Jones
As I have said, there is still a significant amount of work ongoing with the sector that we need to bring forward to amend those regulations. That work will continue. When we get to the point where we are able to put more meat on the bone, we will certainly do so and that information will certainly be available to the House.
On amendments 2 and 23, the explanatory statement provided by the hon. Gentleman on amendment 2 demonstrates that he is seeking to ensure that a proportion of business rates income is retained specifically for the purposes of spending on social care services. Similarly, amendment 23 seeks to impose conditions on how locally raised business rates should be spent by a council and by central Government if we were to retain the central share. I will explain why the amendments are not necessary.
As the hon. Gentleman is aware, decisions are yet to be taken about the services to be devolved to local government to make 100% of business rates retention fiscally neutral. That does not require primary legislation and is therefore not a part of the Bill. Funding for all services that councils deliver, including social care services, will be part of the considerations. The fair funding review, which I mentioned earlier, will also consider the relative needs of local authorities, including adult social care, and will set initial funding allocations for the 100% rates retention system.
As I said earlier, we recognise the pressure on councils. Despite the comments from Labour Members, we also recognise the challenges of and the pressures on social care services, but we have taken action to help with such pressures. Local government will receive up to £7.6 billion over the course of this Parliament to spend on adult social care services. I assure the hon. Member for Harrow West that the introduction of the 100% business rates retention system does not mean that local government may no longer receive any funding from a central Government grant. Where there is need to provide a funding stream for a specific service or outcome, the Government can continue to make such provision.
I hope that I have reassured Members in a reasonably pithy way that the amendments are not necessary and that we can achieve their aims without taking a central share of business rates income. I therefore ask the hon. Gentleman to withdraw the amendment.
Mr Thomas
We have had an interesting debate. The challenge set before the Minister in amendments 1 and 23 was to clarify the Government’s intent towards the redistribution concerns of local authorities. We have not yet had clear answers to my specific questions on redistribution.
I asked how redistribution would work in practice. We have not had an answer to that question. I asked whether there would be amendments to the system for tariffs and top-ups. I do not think that the Minister mentioned them at all in his response. I asked how, given the importance of revenue support and other grants to ensure that areas’ spending power is equalised, the new system would make such compensation. We have had only a partial answer to that—I will come back to it in the clause stand part debate. I asked for more clarity on the key principles on which the fairer funding formula will operate. It is true that I got that offer of some principles, but no clarity beyond those very basic, broadbrush principles; nor was there any clarity—or even, I am sad to say, any recognition—about the concerns facing the poorest areas in income and spending power, as opposed to wealthier areas such as Westminster, under the new system.
I am concerned that we are no further forward. It was interesting to hear the Minister talk about the need to get the Bill through in order to move ahead with the other elements of the package, but as I indicated in an intervention there was nothing to stop the Minister from submitting the proposals to prelegislative scrutiny. The obvious place to do that would have been in the Communities and Local Government Committee, as has happened in the past for similar pieces of legislation.
The only thing that would appear to be absolutely fundamental for Ministers in the Bill is the abolition of the local government finance settlement and the scope for a debate in the House of Commons on the state of local government finances. The only thing that Ministers will benefit from immediately seems to be the absence of that particular form of financing.
Mr Thomas
The hon. Gentleman was unfortunately not here at 11.30 am when I made clear our support for the principle of 100% business rates retention. Clearly, we want the system to work. However, I suggest to him that the purpose of this Committee is surely to probe what evidence there is for the case that the Government are making. He is slightly more considered than the usual Conservative MP one gets to sit opposite on these Committees, so I ask him where the evidence is, for instance in an impact assessment, to suggest that there will be a significant increase in economic growth as a result of the Bill? If the 50% business rates devolution did not offer that evidence, as one would have expected it might, where is the evidence that 100% business rates devolution will produce that?
Let me make it clear: I do support the principle of 100% business rates devolution, but the job of the Opposition is to expose where there is a lack of evidence, to challenge Ministers to provide that evidence and to ask for the detail of how the system is going to work. In the absence of that, one is entitled to have a little scepticism.
Mr Jones
The hon. Gentleman asks what additional incentive is provided for a local authority in a move from the 50% regime to the 100% regime. I am sure he will know from the Bill that we are scrapping the levy, which is effectively a tax on growth. That will give local authorities far more of an incentive to do the right thing, support businesses and widen their business rate base.
Mr Thomas
It is interesting that the Minister chooses to talk about the levy and not the lack of evidence for economic growth having been generated by the 50% business rates devolution. One would have thought that there would have been some evidence to justify the assertions that were made in 2013-14 by his predecessor that a whole new wave of economic growth would be generated as a result of the measures. In the clause 1 stand part debate, I hope to suggest that factors other than local councils’ attitude to development might be holding back economic growth.
Sadly, we did not hear anything from either the Minister or the hon. Member for North Swindon that offered confidence to a council such as Allerdale Borough Council that its difficulties with the barriers to economic growth will be dealt with. The hon. Gentleman made a valiant try by suggesting that pooling might work. I do not know whether he knows Keswick in the Lake District, which is the central town in Allerdale.
Mr Thomas
I gently suggest to Government Members that Heathrow brings the issue into fairly graphic light. In the evidence that Professor Tony Travers gave on Tuesday, he acknowledged that, where there is a major infrastructure development, that, rather than any actions of the local council, is likely to be the key driver of economic growth and business rates in an area. One can imagine the same issue with High Speed 2, which, wherever a main station or terminus is located, will be the key driver of economic growth in an area, notwithstanding other measures that the local authority might take. That surely justifies even more the case for redistribution of the revenue generated by business rates.
Mr Thomas
The hon. Gentleman makes an interesting point. He would also acknowledge that if one has significant numbers of new people living in an area, one has to increase the services there. He presents an optimistic scenario, but although the business rates income might be matched, there might be additional costs arising from the provision of new or extra services.
Mr Jones
The hon. Gentleman has made the point about converting offices, for example, for residential use several times. In the spirit of localism, which is what the Bill is all about, let me ask this question: is it not right that if a local authority does not want to take that approach, it could issue an article 4 direction, which would protect that office block as offices?
Mr Thomas
The Minister is right: the local authority could do that, but let us assume that, for whatever reason, it does not. Not every local authority will want to stop every landlord from converting land to offer housing. I think about my council and the housing crisis in London. There is a very difficult conundrum and balancing act for local authorities. Do they try to take action to deal with the housing crisis, because of the 100% business rate devolution? Do they look to encourage business rates growth? If Ministers cannot sort out the housing crisis, local authorities in this situation will be caught between a rock and a hard place, and they will have to make very difficult choices.
Mr Jones
The Government support clause 1, which will enable the introduction of 100% business rates retention for local government. It covers a number of different decisions, including the changes in schedule 1, which I will come to later.
We discussed the scrapping of the central share extensively when we debated the Opposition amendments—
Mr Jones
I am not going to reopen that debate. I say that as a direct answer to the hon. Gentleman, who is quite good at looking backwards and never forwards in life—but I will not hold that against him. Instead, I will speak about the payment of revenue support grant, about which there has been much discussion during this debate.
Clause 1(3) will remove chapter 2 from part 5 of the Local Government Finance Act 1988, which provides for the payment of the revenue support grant in England. As part of 100% business rates retention, we will devolve existing grants and new responsibilities to councils. As the Committee has discussed on a number of occasions, that will give councils control of approximately an additional £12.5 billion of business rates to spend on local services. The revenue support grant, which will be worth £2.3 billion in 2019-20, is part of that.
Let me be clear that the Government will retain a number of powers. Much has been said about how the Government might be able to deal with payments to local authorities. To reassure Opposition Members, under section 31 and section 36A of the Local Government Act 2003 and section 88B of the Local Government Finance Act 1988, payments can be made by Government to local authorities. I will give a couple of examples.
Mr Jones
Before I give way to the hon. Gentleman, I will mention another example: the Homelessness Reduction Bill, brought forward by my hon. Friend the Member for Harrow East (Bob Blackman). He has done a magnificent job with a Bill that the Government fully support and that will reduce the number of homeless people in our country. To support that Bill, the Government will make available additional funding—£61 million in this case—to local authorities through a section 31 grant. The assertion that if an authority does not have revenue support grant, funding cannot be given from central Government to local government, is false.
Mr Thomas
I intervene briefly to make the point that perhaps the difference between the provision of revenue support grant and of the grant for flooding to which the Minister alluded is that the grant for flooding was given after the event, whereas the provision of revenue support grant allows authorities to think ahead—“There may be issues around flooding here, so we will allow flood defences to be built earlier by providing a bit of money though the revenue support grant now.”
Mr Jones
I would not disagree with the principle of the hon. Gentleman’s argument, but there are mechanisms other than revenue support grant through which payments will be made within the system. In particular, while 100% of the money raised through business rates will be retained by local government, quite clearly a core principle of that will be redistribution.
The removal of revenue support grant is part of wider changes we are making to provide increased funding for certain councils, which we know councils welcome. We are helping to move local government away from dependency on Whitehall through clause 1(4), which introduces schedule 1 to the Bill, containing a framework in law for multi-year settlements.
Mr Jones
As we have covered quite extensively, there is redistribution within the system. There will be resets of the system, and a baseline will be set, so there is the mechanism to provide that. The overriding point, as acknowledged by local government, is that it is good that the revenue support grant mechanism is not in the Bill.
Mr Thomas
One small reason to celebrate at the end of this clause stand part debate will be the revelation that something the Minister proposed in the consultation document is confirmed and will be a reality. As he is on a roll in that respect, will he tell us how long the gap between reset periods will be? Has his Department made a decision on that?
Mr Jones
As I have said to the hon. Gentleman on a number of occasions, a number of regulations and other pieces of work under the Bill will be needed to determine the detail of the scheme. We will be working carefully with local government to determine matters such as that to which he refers.
I do not intend to delay the Committee for much longer. Together the changes reflect the fact that under 100% business rates retention there will no longer be an annual finance settlement to distribute central Government grant to support local services. Local authorities will be more financially self-sufficient, funding local services from local resources. I therefore recommend to the Committee that the clause stand part of the Bill.
Mr Thomas
I will respond briefly to the Minister. The Labour party will not object to the clause standing part of the Bill, but with this caveat: the abolition of so much grant funding from central Government to local authorities is an issue of considerable concern to local government, notwithstanding its general support for the principle of 100% business rates devolution. We will reflect on what the Minister has said, we will celebrate the little bit of clarity that we got in the debate, but we will not object to clause 1 standing part of the Bill.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Jackie Doyle-Price.)
Local Government Finance Bill
Debate between Gareth Thomas and Marcus JonesMonday 23rd January 2017
(7 years, 11 months ago)
Commons ChamberRead Full debate Local Government Finance Bill 2016-17 View all Local Government Finance Bill 2016-17 Debates Read Hansard Text
Mr Jones
I absolutely understand that local government has been complaining for far too long that the incentive to create growth is not there, particularly because of things such as the levy, which was implemented in respect of the 50% business rate retention scheme. As my right hon. Friend will know, that levy is being scrapped by the Bill.
This is not a Bill that increases spending and puts a greater strain on local taxpayers. Rather, it offers a focused package of reform that will encourage and support local growth, while we continue to live within our means. I will start with the commitment made in October 2015 that by the end of the current Parliament local government would retain 100% of locally raised taxes. In implementing our reforms, we will move local authorities away from dependency on central Government grant and towards greater self-sufficiency. Let me take this opportunity to record my gratitude for the substantial contributions made by many in local government, and in businesses, to the development of the reforms. The Bill is a major milestone in the process, and establishes the legislative framework for the reformed system. It reflects the significant input that we have received to date, and our collaborative approach will continue as we determine the detail of the implementation of the new system.
A key part of the new system will be the introduction of stronger incentives for local authorities to increase their business rate income. That will build on the current system of 50% business rate retention. Under the reforms, which we aim to implement in 2019-20, local government will retain about an additional £12.5 billion in revenue. To ensure that the reforms are fiscally neutral, authorities’ grant will be replaced by locally raised taxes for existing responsibilities, or they will be given new responsibilities. Those matters will be subject to separate discussions, and will not be dealt with in the Bill. However, the Secretary of State announced last week that the devolution of attendance allowance funding was no longer being considered as part of the business rate reforms, and I am happy to confirm that today.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
In the consultation paper that they published last year, the Government, suggested that attendance allowance might be passed down to local government—I am glad that that is not happening—and that the £3 billion public health grant, and the better care fund that is so crucial to local authorities that face a social care funding crisis, would be axed as part of the fiscal quid pro quo applying to business rates devolution. Is that still the Minister’s intention?
Mr Jones
As the hon. Gentleman will know, the Bill does not deal with the principle of what additional matters will or will not be devolved to local government. Social care funding is an extremely important issue. It is this Government who have given local authorities the opportunity to spend up to an additional £900 million on social care in the next two years, on top of the additional package of £3.5 billion to which we have given councils access. In total, we have given them access to an additional £7.6 billion in the spending review period, which is dedicated solely to adult social care.
Mr Thomas
I have given that some thought. If the right hon. Gentleman is successful in getting on to the Bill Committee, I hope that we can debate such questions a bit more.
The Bill does not answer the many questions that local councils have about how business rate retention will work in practice. In particular, there is no clarity about what additional responsibilities councils will be allocated in return for 100% business rates retention.
The Government’s record on local government will give few people confidence that they are capable of addressing such concerns. Over the past seven years, this Government and their predecessor have taken an axe to local government spending. The people of England have been left paying more council tax for worse local public services. Last month’s local government settlement only brought more of the same: Ministers forcing councils to put up council tax and make more cuts to local services.
Mr Marcus Jones
What the hon. Gentleman is saying is interesting because council tax is 9% lower in real terms than it was in 2010. Does he accept that council tax doubled when Labour was in government? That is not a record to be proud of.
Housing and Planning Bill (Sixteenth sitting)
Debate between Gareth Thomas and Marcus Jones
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
I beg to move, That the clause be read a Second time.
Mr Gray, it has been a pleasure to serve under your chairmanship these past few weeks, and it remains so today. With your permission, before I speak to new clause 23, I would like to inform the Committee that last night I sent the Clerks an updated assessment of the Bill’s legislative competence, following the amendments agreed so far and those being discussed today. I trust that it will help to inform Mr Speaker when he comes to re-certify the Bill at the appropriate time.
New clause 23 give the Secretary of State a power to make regulations setting out a new statutory redemption procedure for rentcharges, excluding those specified in new section 7A(2) of the Rentcharges Act 1977, as inserted by subsection (2) of the new clause. Currently, a rent payer can apply to the Secretary of State under section 8 of the 1977 Act for a redemption certificate. The rentcharge team will carry out the necessary checks and advise the rent payer on the amount needed for redemption. Once that amount has been paid, the team will issue a certificate of redemption.
We do not believe it appropriate in this day and age, and especially in the current financial climate, for the Government to continue to have a role in the redemption of rentcharges. The clause will allow the current procedure to be replaced with a mechanism that will be set out in regulations. The new procedure will no longer involve the Secretary of State in the redemption of rentcharges. Instead, the rent owner and the rent payer will be required to take certain steps for the redemption of a rentcharge. [Interruption.]
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
On a point of order, Mr Gray. I am trying to listen to the Minister with great interest, but there is clearly a conversation going on elsewhere within the room that is preventing me from listening to what feels like an excellent contribution.
Mr Jones
New clause 32 and new schedule 4 together prevent local authorities in England from offering secure tenancies for life in most circumstances. They deliver on a commitment in the July Budget to review the use of lifetime tenancies, with a view to limiting their use. Currently, the vast majority of new social housing tenancies are offered on a lifetime basis, meaning tenants have the right to live in their social home for the rest of their lives, provided they keep to the conditions of their tenancy.
Since April 2012, following changes introduced by the coalition Government’s Localism Act 2011, local authorities have been able to offer so-called flexible tenancies—tenancies of a fixed term of no less than two years. However, they are not taking advantage of that flexibility. In 2014-15, only 8% of social tenancies granted by local authorities were flexible tenancies. That is only just over than 9,000 in all. At present, 236,000 social tenants are forced to live in overcrowded conditions due to the lack of suitably sized properties, while 380,000 households occupy social housing with two or more spare bedrooms. Under those circumstances, we believe that continuing to offer social tenancies on a lifetime basis is not an efficient use of scarce social housing.
The new clauses will significantly improve landlords’ ability to get the best use out of social housing by focusing it on those who need it most for as long as they need it. That will ensure that people who need long-term support are provided with more appropriate tenancies as their needs change over time and will support households to make the transition into home ownership where they can. In future, with limited exceptions, local authority landlords will only be able to grant tenancies with a fixed term of between two and five years, and will be required to use tenancy review points to support tenants’ move towards home ownership where appropriate.
Let me be clear: we are not taking away security of tenure from existing lifetime tenants who remain in their home. Moreover, these amendments will ensure that where existing lifetime tenants are moved by their landlord—for example, as part of an estate regeneration—they will retain their lifetime tenancy. We want to ensure that fixed-term tenancies do not act as a barrier to mobility.
Where lifetime tenants choose to move, local authority landlords will have limited discretion to offer further lifetime tenancies. We will prescribe the circumstances in which local authorities may exercise that discretion in regulations. We expect that such circumstances will include tenants downsizing to a smaller property and moving for work. We will obviously ensure that we develop the regulations in discussion with local authorities. Outside those limited exceptions, if local authorities try to offer a lifetime tenancy or one that is shorter than two years or longer than five, whether deliberately or by mistake, the tenancy will default to a five-year fixed term.
In the main, the statutory protections that the amendments provide for those granted a fixed-term tenancy are similar to those currently enjoyed by flexible tenants. A person who is offered a fixed-term tenancy by a prospective landlord may request a review of the landlord’s decision on the length of term offered. The landlord will be required to look at their decision again and explain how it was reached in the light of their published tenancy policy.
Mr Jones
The hon. Gentleman raises a good question, which I will come to later in my remarks.
Tenants will usually be able to terminate their tenancy at any stage, while enjoying protection from eviction during the fixed term. The local authority landlord will need to demonstrate to the court that one or more of the grounds for possession is proven and that they are acting reasonably in seeking possession.
The amendments will introduce an important new statutory protection. Local authority landlords will be required to carry out a review of the tenant’s circumstances between six and nine months before the end of the fixed term, so that they can take an appropriate decision about the household’s housing need and advise the tenant on their housing options. That will include moving into home ownership where that is a realistic option. The new review process will also apply to existing flexible tenants unless they have less than nine months to go on their tenancy agreement.
Mr Jones
In my comments earlier, I set out clearly that that can be the case, but that will depend on the circumstances of the tenant at the time and the policy of the local authority.
We want housing association landlords and tenants to reap the benefits from shorter-term tenancies as well. However, we clearly need to consider any changes to housing associations in the light of the recent decision of the Office for National Statistics on classification. We are working through the ONS reclassification decision and considering the options but, given the complexity of the matter, careful consideration is needed. We will continue to work closely with the housing association sector, the social housing regulator and other stakeholders to finalise the deregulatory package, and we will consider any changes to lifetime tenancies in the context of that work.
New clause 33 and new schedule 5 change the rules on succession to secure tenancies and make equivalent changes for introductory and demoted tenancies. Currently there are significant differences between the succession rights for secure tenancies granted before April 2012 and those for tenancies granted after the date when changes under the Localism Act 2011 came into force.
For secure tenancies granted before April 2012 there is a limit of one succession. Spouses and civil partners qualify to succeed automatically, while other family members, including cohabitees, also qualify but only if they have lived with the tenant for at least 12 months immediately before his or her death.
Since April 2012, only spouses, civil partners and those living together as spouse or civil partner have a statutory right to succeed. However, local authorities can provide any additional succession rights that they think appropriate, including to people who have already succeeded, and to non-family members such as live-in carers.
We do not think that there is a justification for retaining the inconsistency of approach between pre-2012 and post-2012 local authority tenancies. We therefore propose that the succession rights for secure tenancies granted before April 2012 be aligned with those granted after that date. The amendments will deliver a consistent approach across all secure tenancies and ensure that common-law partners are put on an equal footing with married couples and civil partners.
Other family members who may have had an expectation of succeeding to a secure tenancy granted before April 2012, having lived with the tenant for at least 12 months, will lose their statutory right to succeed. We do not think that it is right that those who may not need social housing, because, for example, they can rent or buy privately, should have the automatic right to succeed to a social home when nearly 1.4 million households are on council waiting lists.
Mr Jones
As I said a few minutes ago, we clearly need to consider any changes that we might want to make. As I intimated, we would consider that, but we need to make any changes in the light of the reclassification. That is why we are saying that we want to consider the position extremely carefully. We expect to work closely with the housing association sector and the social housing regulator, and other stakeholders, to finalise any deregulatory package. We will consider—and we are considering—changes. That will happen in the context of the work I have mentioned.
I was explaining that family members other than common-law partners, married couples and civil partners will lose any statutory right they may have had to succeed to a secure tenancy granted before April 2012. Instead, local authorities will have the discretion to grant them succession rights, which must be written into the tenancy agreement. Where local authorities grant additional succession rights, we expect they will apply the same rules to tenancies granted before and after April 2012. However, we will provide guidelines to assist local authorities to exercise their discretion.
Mr Thomas
Does the Minister envisage any exemptions for households where there are young children? One thinks, for example, of the need to offer young children stability of schooling, allowing them to go through primary school or to complete their passage through GCSEs. Might there be flexibility on secure tenancies in that situation?
Mr Jones
When a housing authority is doing a review of the circumstances of tenants who are in that position—where their bedrooms are fully occupied, and where they have children at schools—we would not expect it to assess their circumstances in the context that they have changed significantly enough to mean that those people would not be able to take a further tenancy from that authority. It is important to stress to the hon. Gentleman that this is all about trying to free up social housing for the people who really need it; this is not about taking away social housing from people whose circumstances have not changed significantly.
To come back to the point I was making about succession, even where family members do not benefit from additional succession rights, the landlord will still be able to issue them with a new tenancy in the same or a different property if they have had sufficient priority under the council’s allocation scheme. That will ensure that landlords take account of particularly hard cases. That feeds into the point made by the hon. Member for Harrow West.
The proposals ensure that spouses, civil partners and those who live together as such continue to have an automatic right to succeed to a lifetime tenancy. That seems only fair, particularly as, in many cases, they will be joint tenants. However, it is difficult to justify why other people should succeed to a lifetime tenancy, particularly when most new tenants will receive a five-year fixed-term tenancy. The proposals ensure, therefore, that anyone other than a spouse or partner will no longer be able to inherit a lifetime tenancy. Instead, if they qualify to succeed, they will be given a five-year fixed-term tenancy. At the end of the fixed-term period, the landlord will be required to carry out a review of their circumstances, as they would need to do for any new fixed-term tenant. If the tenant is still in need of social housing, the landlord will be able to grant a further fixed-term tenancy of between two and five years. We think that, taken together, the amendments strike the right balance between protection for the tenants and their families, and flexibility for landlords.
Mr Jones
I thank the hon. Gentleman for his question. There are people who have certain needs, and he mentioned somebody who is disabled and in a property that has been specially adapted to deal with that disability. He needs to realise that the amendments are not couched in terms of automatically asking somebody in those circumstances who comes to the end of a fixed-term tenancy to move on. They are about reviewing circumstances. If, after that review, it is found that the disability of the person in question has not changed and that they still need that type of property with the housing adaptations that have been made, the local authority should not do anything other than renew the tenancy, as long as the person who is occupying the property has fulfilled the obligations under their tenancy agreement.
Let me come on to one or two of the questions that were asked during the debate. A question was asked about the impact assessment. We will publish a revised Bill impact assessment, and this will certainly be included in that.
Mr Jones
I assure the hon. Gentleman that it will be published before the Bill goes to the Lords.
On the right to buy, the answer is yes, the tenant will still be able to exercise their right to buy. They must have had three years in social housing to be eligible. That is the same for flexible tenancies. Part of the purpose of the review at the end of the tenancy is to consider whether a person can exercise the right to buy if they are eligible to do so.
Mr Jones
I thank my hon. Friend for that intervention. It is an indication either of how far to the left the Labour party has gone or that, as usual, Labour Members have selective amnesia about the views their party held when they were in government. Time is pressing, so I shall move on.
The hon. Lady mentioned the protection for tenants who do not have their tenancy renewed. The Protection from Eviction Act 1977 means that if a person is being evicted, a court hearing will always be required. Human rights issues can be considered at that hearing. In my initial remarks, I also said that before any court hearing there would be an internal review so that the local authority in question could ensure that it had complied with its own housing policy on evicting a tenant.
A comment was made about the policy being burdensome. The legislation is all about making better use of social housing, and it will certainly save on temporary accommodation costs and the need to manage waiting lists. Our assessment of the policy’s impact will be revised, but we need to consider the family who have been in high-rent temporary accommodation for years. The Government have already shown a commitment to such people by allowing those in temporary accommodation to move into the private rented sector, which means that people who have to use such accommodation now do so for, on average, seven months less than was the case in 2010. That shows that the Conservative party is interested in getting the most vulnerable people housed, not in a policy built on ideology, as the Labour party seems to be.
Housing and Planning Bill (Fifteenth sitting)
Debate between Gareth Thomas and Marcus Jones
Mr Thomas
I am minded to support the Government amendments, particularly as it is the hon. Gentleman moving them rather than the Minister for Housing and Planning, but will he set out why he thinks they are needed? Compulsory purchase powers have existed for a long time, and I am not aware of a huge problem in terms of access in order to survey land. Why is it a problem now?
Mr Jones
I do not know what my hon. Friend the Minister for Housing and Planning has done to upset the hon. Gentleman. The reason we are introducing the provisions is to put all authorities on a level playing field when undertaking or exercising the right to compulsory purchase. At the moment, the rights that we are discussing can be exercised by local authorities, the Homes and Communities Agency and urban development corporations, but there are organisations, such as NHS trusts and Natural England, and certain Ministers within the Government, who do not have the same powers, so we have sought to extend them to ensure that the situation is consistent.
Mr Thomas
That is generous of my hon. Friend. It is a particular concern of my constituents, given the huge cuts to Transport for London grant, which might mean that access programmes that exist for other stations are cut, putting even further away the prospect of better access at Harrow-on-the-Hill station. If there were a way to secure some planning gain from the development at the Harrow post office site that might be invested in better access and it might be another route to achieving the objective that my constituents have had for a long time now, under both Mayors of London, which is to make Harrow-on-the-Hill a fully accessible station. I hope that the Minister will be particularly attracted to amendment 282. In that spirit, I support my hon. Friend’s amendment.
Mr Jones
In replying to the hon. Member for City of Durham and Opposition Members, it may be helpful if I start by clarifying the purpose of clause 111. It does not confer any compulsory purchase powers on acquiring authorities; it merely allows acquiring authorities to enter land for survey or valuation purposes in connection with a proposal to acquire land. The intention behind the hon. Lady’s amendments therefore could not be delivered through the clause. In any case, the amendments are unnecessary. Local authorities already have the powers to acquire land by compulsion in the circumstances that the hon. Lady mentioned, provided there is a compelling case in the public interest and they have a deliverable scheme.
Also, to set the record straight, there are not currently 600,000 long-term empty properties. If the hon. Lady checks back and looks at the figures, 600,000 was the number of long-term empty properties under the last Labour Government. Under the guidance of my party in coalition and now in Government on our own, we have the lowest level of long-term vacant properties on record: 206,000. There is still significantly more to do, but we have put significant provisions in place to reduce the number of vacant properties, and the figures show that those provisions are working.
Mr Jones
We would expect most acquiring authorities exercising their compulsory purchase rights to reach agreement with owners and occupiers about entry to their land. Warrants are only for those cases when entry is refused or is likely to be refused. It is impossible to predict how many warrants will be sought, as that will depend on the number of compulsory purchase proposals that come forward, the number of affected owners and occupiers, and their reaction to each particular proposal. Just to give the hon. Gentleman some reassurance, however, clause 112 makes it absolutely clear that while the warrant authorises the use of force, a justice of the peace, when deciding whether to issue a warrant, must be satisfied that the use of force is reasonable in the particular case, and the force that may be authorised is limited to what is reasonably necessary. In addition, all evidence in proceedings must be given under oath and the warrant must specify the number of times that entry will be allowed.
Mr Thomas
The Minister has helpfully detailed the context in which a warrant might be issued and specified that he expects that the vast majority of efforts to enter and survey land will not require a warrant in the first place. However, to come back to the nub of my earlier comments, why is the power necessary? Have the Minister’s civil servants had to field a series of requests from local authorities or developers for these powers?
Mr Jones
I have set out that the warrants will be used only when the landowner has an adverse reaction to a request to enter and survey or value land. It is clear that many acquiring authorities and landowners will come to arrangements themselves, but the case the hon. Gentleman mentioned of his own railway station is a prime example of when a scheme was being put forward but the landowner completely refused to allow the acquiring authority the right to come on to the land to survey and value it. I expect that he would want some sort of mechanism whereby that acquiring authority would be able to enter the land.
Mr Thomas
Does the Minister have fracking in mind? He shakes his head and looks pained—I recognise that that is a sensitive subject for Conservative Members—but does he envisage a warrant requiring the use of force being needed if protesters had barricaded themselves in, or if the person who owned the land did not want someone who had been given fracking consent to survey what may or may not be underneath the ground?
Mr Jones
The hon. Gentleman has come up with many conspiracy theories during our scrutiny of the Bill and I suspect that this may well be another one. I have set out the reasoning behind clause 112 in detail and hope that hon. Members will agree to it.
Question put and agreed to.
Clause 112, as amended, accordingly ordered to stand part of the Bill.
Clause 113 ordered to stand part of the Bill.
Clause 114
Enhanced authorisation procedures etc. for certain surveys
Amendments made: 251, in clause 114, page 54, line 11, after “surveys” insert “or values”.
See Member’s explanatory statement for amendment 246.
Amendment 252, in clause 114, page 54, line 15, after “survey” insert “or valuation”.
See Member’s explanatory statement for amendment 246.
Amendment 253, in clause 114, page 54, line 17, after “survey” insert “or valuation”.
See Member’s explanatory statement for amendment 246.
Amendment 254, in clause 114, page 54, line 32, after “survey” insert “or valuation”.
See Member’s explanatory statement for amendment 246.
Amendment 255, in clause 114, page 54, line 33, after “survey” insert “or valuation”.
See Member’s explanatory statement for amendment 246.
Amendment 256, in clause 114, page 54, line 40, after “survey” insert “or valuation”.—(Mr Marcus Jones.)
See Member’s explanatory statement for amendment 246.
Mr Thomas
In the spirit of my contribution on clause 112, I want to ask some questions about clause 117. Why do we require a clause on the right to enter and survey Crown land? I struggle to understand why a warrant authorising the use of force might be necessary to enter and survey Crown land, so I would welcome the Minister’s setting out an example of why that might be necessary.
I also struggle to understand why somebody who is, presumably, employed by the Queen might be at risk of committing an offence under clause 116 in relation to entering and surveying Crown land. Why on earth do we need to include Crown land under the Bill? One assumes that, as a general rule, Her Majesty and those who exercise control of her lands would work with Government Departments and developers to allow them to enter and survey land. Even if those employed by Her Majesty did not co-operate, I struggle to understand why we would want to take action against staff employed to look after Crown land, or why the Minister thinks that a warrant authorising the use of force is necessary. Will the Minister set out in particular whether this measure covers Crown Estate land? Has he had any consultations with the Crown Estate itself about how clauses 111 to 116 apply to Crown Estate land under the terms of clause 117?
Mr Jones
I will respond quickly to the hon. Gentleman’s questions. Clause 117 explains that the new power of entry will be available in relation to Crown land—any land in which there is a Crown or a duchy interest, for example—but the permission of the appropriate Crown authority must be obtained first. That ensures that there is appropriate protection for Crown land. The measure is based on existing precedent. For instance, the power of entry set out in sections 53 and 54 of the Planning Act 2008 involves a similar provision in respect of Crown land.
Question put and agreed to.
Clause 117 accordingly ordered to stand part of the Bill.
Clause 118 ordered to stand part of the Bill.
Clause 119
Confirmation by inspector
Housing and Planning Bill (Twelfth sitting)
Debate between Gareth Thomas and Marcus Jones
Mr Thomas
Given that there are a series of amendments to the clause, I do not want to detain the Committee unnecessarily with a clause stand part debate. In order not to do that, will the Minister reflect, while are we discussing exemptions, on whether tenants of housing co-operatives could be part of the exemptions he is looking at?
Mr Jones
The hon. Gentleman has shown a great interest in the tenants of housing association co-operatives throughout the Committee’s deliberations. I refer him to the answer I gave the hon. Member for City of Durham: we are considering carefully what exemptions will be in the regulations. We will certainly consider his comments. On the basis of the assurances I have given, I hope the hon. Lady will withdraw her amendment.
Dr Blackman-Woods
I thank the Minister for his response. The detail of the response indicates to me, and I hope to everyone else, that our proposal, far from being a wrecking amendment, as the hon. Member for Peterborough suggested, raises serious issues on behalf of some of the most vulnerable people in our society.
Housing and Planning Bill (Thirteenth sitting)
Debate between Gareth Thomas and Marcus Jones
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I rise to support the amendment. In doing so, I shall focus on the representations made to me about the plight of small co-operative and community-led housing associations—a point I put to the Under-Secretary of State in a previous intervention.
My hon. Friend the Member for City of Durham is right to say that the focus of concern for housing co-operatives has been on the administrative costs of managing pay to stay and its impact on the functionality of co-operatives. I take at face value the words of the Minister for Housing and Planning on housing associations. On Tuesday, he said:
“The Government trust housing associations to look after their tenants. We believe that they have their tenants’ best interests at heart and that they will use their discretion wisely.”––[Official Report, Housing and Planning Public Bill Committee, 1 December 2015; c.376.]
That was said in the context of other elements of the Bill, but surely it is equally appropriate in the context of pay to stay.
The Under-Secretary of State made it clear that he will consider the issue of housing co-operatives in relation to the regulations, and I very much welcome that. However, I say to him that many co-operatives, particularly those in London, have made contact—for example, Vine Housing Co-operative and Coin Street Community Builders have been in touch with me, and Edward Henry House Co-operative has made representations to us. They say that, because of the cut in rents being delivered in the Welfare Reform and Work Bill, there is no additional funding that they will be able to get to deliver some of the other proposals in this Bill and cover the administrative costs they will face.
The co-operatives are not, in the main, big housing associations with the scale to find efficiency savings naturally, not least because they do not usually have large numbers of staff or other resources. Much of the administration of housing co-ops is done on a voluntary basis, as part of the quid pro quo of being a part-owner of the housing co-operative. If pay to stay is introduced, Ministers will understandably want housing associations to have a series of monitoring arrangements in place. Those monitoring arrangements will inevitably create an additional burden, and at the moment small housing co-ops are struggling to see how they will be able to fund that. They also worry more generally for some of their members, who may face a sharp increase in the cost of staying in the housing co-operative, and therefore housing association, property. Rent arrears could also increase, which would be an additional cost. Because of the small nature of most housing co-ops, that would be difficult for them to bear.
For those reasons, I urge the Under-Secretary to look even more seriously at the potential impact on small housing associations. I will write to him separately outside the Committee, but I hope he will undertake to look at that letter and representations on this provision from housing co-operatives.
Mr Jones
I shall take the final point made by the hon. Member for Harrow West first. I will be happy to receive his representations, along with those from across the sector, on behalf of the smaller housing associations and co-operatives.
On amendment 211, we recognise that landlords will incur a cost in operating the policy and we have consulted on that. We have proposed that local authorities should be able to offset administration costs from additional income, and for housing associations the benefit from operating the system will far outweigh the costs. Regardless, our aim will be to design an approach that is as simple as possible to administer and we will take forward further engagement with landlords on that point.
The amendment is therefore neither necessary nor practical, and I hope the hon. Lady will seek to withdraw it.
Housing and Planning Bill (Ninth sitting)
Debate between Gareth Thomas and Marcus Jones
Mr Thomas
I thought I knew the direction of the Minister’s remarks, so rather than necessarily having to make a formal speech in a clause stand part debate, I thought I might simply intervene to ask a question and, I hope, not have to press matters further.
Subsection (2)—and, indeed, subsection (1)—states that the tenant must have “a good reason” to press for reinstatement. I wonder whether the Minister might set out on the record what those good reasons are. I say that in the spirit of him wanting to help tenants, as the clause implies, who have unfairly or wrongly had their tenancy terminated under section 49, and I ask in a context in which occasionally, debates when legislation is being introduced can be used to provide guidance to the courts about what the purpose in the Government and Parliament’s mind was behind particular clauses.
Simply, will the Minister set out in more detail than perhaps he was initially intending what constitute, in his mind, the good reasons that might see a tenant wanting to go to a county court to get a reinstatement order, and indeed, being successful?
Mr Jones
I thank the hon. Gentleman for that question. As he rightly points out, that would be a matter for the court, but to reassure him about the spirit in which the clause on reinstatement is intended, let me give him an example. A tenant may go away on holiday for a short period, during which they have a serious accident that possibly hospitalises or incapacitates them for some time. It may well be that that renders any contract with the landlord impossible for them to fulfil, and therefore, the courts may decide, on the basis of those extenuating circumstances that the tenant could not do anything about, that it would be right and proper to reinstate the tenancy. I hope that reassures the hon. Gentleman about the thinking behind the clause.
Mr Thomas
I apologise for detaining the Committee on this clause, which is helpful, as was the Minister’s example. He will be aware from our discussions this morning that a series of other examples were discussed, such as short prison sentences, someone being taken ill with a mental health condition, or someone perhaps with the early onset of an incurable condition such as Alzheimer’s. Does the Minister see those examples, similarly, as a good reason for the county court to reinstate the tenancy?
Mr Jones
Although I understand where the hon. Gentleman is coming from, as I said—I have already given a reasonable example of where we are coming from in proposing the clause—it would be for the court to decide on the particular circumstances at a particular time and on whether they deem those circumstances as such that the tenancy should be reinstated.
Housing and Planning Bill (Eighth sitting)
Debate between Gareth Thomas and Marcus Jones
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship once again, Sir Alan. We have had a full debate with a number of points raised by hon. Members on both sides. I will do my best to respond to as many of them as I can.
The amendment would require a landlord to obtain confirmation from the relevant local housing authority that a property had been abandoned before they could serve a notice on the tenant to bring an assured shorthold tenancy to an end and repossess the property. We have introduced a procedure for dealing with abandoned premises that will allow a landlord to recover a property that has been abandoned without the need to obtain a court order. We have introduced safeguards to ensure that a landlord can use the process only in circumstances in which a tenant has genuinely abandoned the property.
Mr Jones
I will make some more progress first. The landlord can recover a property only when warning notices have been served on the tenant. The first warning notice would not in practice be able to be served unless at least four consecutive weeks’ rent is unpaid. The second warning notice may be served only when at least eight consecutive weeks’ rent is unpaid. That second warning notice must be given at least two weeks, and no more than four weeks, after the first warning notice. Each warning notice must state that the landlord believes that the premises have been abandoned and that the tenant or named occupier must respond in writing before a specified date, which must be at least eight weeks after the first warning notice is given, if the premises have not been abandoned.
The landlord proposes to bring the tenancy to an end if either the tenant or a named occupier responds in writing before that date. Finally, if the tenancy has been brought to an end using the abandonment procedure, where a tenant has a good reason for failing to respond to the warning notices they may be able to apply to the county court for an order reinstating the tenancy.
It is clear that landlords must go through a lengthy and detailed process before they can regard a property as being abandoned. In addition to the requirement that at least eight consecutive weeks’ rent remains unpaid, they must also serve a series of warning notices on that tenant and, where applicable, any other named occupiers.
Mr Jones
I will in a moment. It would be disproportionate and an unnecessary extra burden on local authorities to impose the additional requirement that a local housing authority must also confirm that a property has, in their view, been abandoned. It may also be difficult for a local authority to determine whether a property has in fact been abandoned. To require them to do so could put them in an extremely difficult position.
Mr Thomas
Will the Minister set out a little more on the general rationale for the provisions? What evidence is there that abandonment is such a huge problem that all those provisions are needed? I do not think we heard any evidence that suggests a problem on the scale merited by the effort gone to by Ministers and civil servants with the clauses.
Mr Jones
I thank the hon. Gentleman for his question. As Labour Front Benchers have set out, there are 1,750 such cases a year and we need put that in context. He and Labour Members want protection for vulnerable people. I agree with that and I will go into more detail on how we will protect them, but there is also a significant number of vulnerable people who need to be housed. When there are abandoned premises that landlords cannot let, that reduces the stock of accommodation available to get those vulnerable people into settled accommodation.
Mr Jones
That brings me nicely to the points that were made about the section 21 notice, which landlords can use to retake possession of a property. It is important to point out that to recover possession under section 21, the landlord would need to obtain a possession order from the court, as has been pointed out, which would obviously involve additional time and the additional cost of going to court.
We need to bear it in mind that the Bill is about bringing forward proportionate measures to protect tenants. The golden thread running through all the measures on the private rented sector is that we are trying to improve the tenant’s lot and tenant protection. At the same time, however, there is a balance between tenant protection and the needs of the landlord—the person who invests in property to house people. The hon. Gentleman and the Labour party need to consider that the measures are a proportionate way to redress that balance, particularly where tenants are clearly not paying their rent and not living at the property.
Mr Jones
It is clear that a landlord who knows the abandonment procedure will know they are going beyond the letter and spirit of the provisions if they do what the hon. Gentleman suggests. As we have identified, there is legislation in place, in particular the 1977 Act, which protects people in that sense.
As for the suggestion that the implied surrender process means that abandonment provisions are not required, there is an existing common-law route of implied surrender, but it can be used only where a landlord is clear that the tenant has definitely left the property—for example, when they have removed all their possessions and returned the keys to the property. Our abandonment procedure will help landlords where a tenant suddenly disappears and stops paying rent by providing a process for landlords to confirm whether the property has actually been abandoned.
That brings me to the Protection from Eviction Act 1977. Any landlord who abuses the process we are introducing by not giving proper warning and repossessing the property when they know that it has not been abandoned will be liable to prosecution under the 1977 Act. Again, the prosecuting authority will usually be the local housing authority, and the tenant can apply to the county court for damages.
Mr Jones
The hon. Gentleman should recognise that action under the 1977 Act would be a criminal process, and would generally be driven by the local authority with responsibility for enforcing that legislation because it would be in a stronger position to do that than a potentially vulnerable tenant who had just been evicted illegally. The second route for the tenant, on the basis of the contract between the tenant and the landlord, would be a civil legal matter. To my knowledge, under both the current legal aid system and that operated by the previous Government, there was no provision for people to receive legal aid support for such civil matters. I hope that answers the hon. Gentleman’s question sufficiently.
Housing and Planning Bill (Seventh sitting)
Debate between Gareth Thomas and Marcus Jones
Mr Jones
I thank the hon. Gentleman for his question. I will come to that during my comments on these amendments.
Amendment 8 provides that the local housing authority must tell a person how long it will ask the tribunal to make a banning order for. The minimum period is six months but there is no maximum term. This will enable the person to make representations about the length of the order. The authority must take account of such representations before making an application to the tribunal.
Amendment 6 provides that where a local housing authority intends to apply for a banning order against a company, it must also apply for an order against any officer of that company who has been convicted of the same banning order offence as the company. This would prevent such individuals continuing to trade in a personal capacity in activities from which the company is barred. Because the local housing authority is required to apply for an order in those circumstances, amendment 7 provides that no notice of intended proceedings need be given to the officer. However, such notice must be given to the company. Nor does this mean that an order is automatically made against the convicted officer. It is for the tribunal to decide, in all circumstances, whether a banning order ought to be made against the individual.
Amendments 10 and 11 are related to amendment 6. They provide that a banning order can be made against the officer of the company, notwithstanding that the officer was not a residential landlord or property agent when they committed the offence. Amendment 18 closes a potential loophole in clause 21 so as to prevent a company subject to a banning order transferring property to another company where both companies have officers in common. Such a transfer would need approval from the first-tier tribunal. The measure prevents the officers of a banned landlord company from setting up another company to take over ownership of the banned company’s portfolio and continue trading under another name.
Mr Thomas
I do not understand. Why should not the tenant be able to do so as well? I get the logic of saying that the housing authority should have the prime responsibility for doing so, but why should not a tenant who is feeling particularly victimised be able to make their own approach directly? We on Opposition side of the Committee are often accused of being in favour of the big state or the nanny state. I ask the Minister gently whether he is not in danger of being accused of the same thing by not being willing to empower tenants to take their own route to seeking justice.
Mr Jones
The hon. Gentleman must understand that this Government have done an awful lot to pass power into the hands of the individual, but ultimately, in this case, there is an issue of public law protection and of ensuring that rogue landlords are held to account. We feel that the best body to do so is the local authority, which will be able to take on rogue landlords to the benefit of the tenants wronged as a result.
Amendment 6 agreed to.
Amendments made: 7, in clause 14, page 9, line 13, after “order” insert “under subsection (1)”
This amendment removes the need for a notice of intended proceedings in cases where a local housing authority is obliged to apply for a banning order because of amendment 6. It would not make sense to invite a person to make representations in a case where the authority is obliged to make an application.
8, in clause 14, page 9, line 16, after “why,” insert—
“( ) stating the length of each proposed ban,”—(Mr. Marcus Jones.)
This amendment requires the length of each proposed ban to be stated in the notice of intended proceedings that a local housing authority has to give a person before applying for a banning order.
Mr Jones
Clause 15 sets out the matters that the first-tier tribunal must have regard to in deciding whether to make to make a banning order against a person. Subsection (1) provides that the tribunal may make the order if the person has been convicted of a banning order offence and if the person was a residential landlord or letting agent at the time the offence was committed.
Subsection (2) provides that the tribunal can make the order only if the local authority has served a notice of intended proceedings on that person and considered their representations before making the application under clause 14. If the tribunal is satisfied that the preliminary requirements are met, it must then decide whether to make a banning order and, if so, what order to make. Subsection (3) sets out the matters that the tribunal must consider when reaching those decisions. It must consider the seriousness of the banning order offence of which the person has been convicted, and whether that person has any other convictions for banning order offences. The tribunal must also consider whether the person is, or has been in the past, entered on to the database of rogue landlords and letting agents. Finally, the tribunal must take account of the likely effect that such an order would have on the person who would be subject to it and anybody else who might be affected, such as the tenant.
In addition, where making the order, the tribunal may make exceptions, as I shall explain when we come to the next clause. Under clauses 16 and 20, a local housing authority can make a management order when a banning order is enforced. These measures will ensure that tenancies do not necessarily need to be brought to an end on the making of a banning order. In certain circumstances it may be appropriate for these tenancies to remain in force and to be managed effectively by the local authority.
A banning order is an extremely strong tool and its impact is far-reaching. It can prevent a landlord or letting agent from continuing to trade, and its effect would remove much-needed rental stock from the market. On the other hand, it is a necessary tool to combat those rogues who have committed serious offences and who, despite being given a chance to improve, continue to operate and to profit by providing poor quality accommodation and following bad management practices, and who put the health, safety and welfare of their tenants at risk. The Government estimate that around 600 applications for banning orders a year will be made to the first-tier tribunal. It will be for that tribunal to take into account the matters to which I have referred in subsection (3), and to decide from the circumstances of the case whether making the order is appropriate and, if so, what form the banning order should take.
Mr Thomas
I am grateful for the opportunity to come in here. After the touching and moving tribute that the hon. Member for Peterborough paid me, I feel duty-bound to intervene on this clause too. I draw the Minister’s specific focus and attention to subsection (2), which is the requirement that the banning order be made on application by a local housing authority only. I do not want to dwell on whether or not a tenant should have been allowed to do that, but perhaps I might ask the Minister to reflect on whether certain organisations other than the planning authority might have been allowed—or might still be allowed—to bring forward an argument to the tribunal for a banning order against a person. In this case a housing advice charity or a major charity such as Shelter would perhaps get access to information about very poor landlords who the local housing authority might not know about.
I am minded in moving this point to draw the Minister’s attention to a parallel situation in consumer law. Individual consumers cannot go to court when there is an allegation of price fixing of consumer products, but organisations such as Which? can do so on their behalf. I wonder whether there is a parallel here that the Minister might want to contemplate. Perhaps in a certain, narrow number of cases a designated organisation—clearly one of good repute, with expertise and experience of going to the first-tier tribunal, so that it is not clogged up with poorly thought-through cases—might be able to bring forward an argument on behalf of a group of tenants to make the case for a banning order. Perhaps individual housing authorities might not want to bring a case where a rogue landlord is operating across a series of housing authorities, whereas an organisation with a London-wide remit or a national remit might be more willing to spend the resource to gather evidence to go to the first-tier tribunal.
I absolutely see the argument that the housing authority should have the prime responsibility, but perhaps the Minister could reflect on whether a small number of additional organisations could be designated by the Secretary of State to take forward cases where there is not an obvious fit to an individual authority area and where they clearly have particular expertise.
Mr Jones
I hear what the hon. Gentleman says. The organisations that he refers to are powerful organisations in the sector and are generally listened to by the Government, local authorities and other organisations. These organisations are powerful in their own right and can make representations to local housing authorities in relation to cases that they may come across or wider issues. The organisation that he refers to can also make representations to the first-tier tribunal when it makes its deliberations. There is therefore the opportunity for those organisations to support both their members and the people whose lives they are designed and set up to make better.
Mr Thomas
What the Minister says is absolutely true. I would encourage him to dwell on this and perhaps return to the point on Report. Why will he not allow a Shelter, or the Harrow Law Centre, for example, to bring forward their own argument on occasion? They work with housing authorities on cases that the local authorities bring forward; why can they not initiate action themselves? I am bringing the Minister specifically to the cross-borough point. Why is he not willing to consider Shelter, for example?
Mr Jones
Again, I hear what the hon. Gentleman says. He is bringing me back to the point that we discussed earlier when I set out quite clearly why the Government think that local authorities are the best placed to deal with this issue.
In London there may be numerous issues across different boroughs. We have a situation where those local authorities will be able to access the database of rogue landlords and therefore be able to get the information that goes across borough. It is incumbent on those local authorities not just to work in the best interests of people renting in the private sector in their borough, but to work with adjoining boroughs and pick up on the issues that also affect tenants in the borough in question, because landlords do not just operate on administrative boundaries; they operate on a wider basis. While I hear what the hon. Gentleman says, I think that the Bill is in a good place in this regard.
Question put and agreed to.
Clause 15, as amended, accordingly ordered to stand part of the Bill.
Clause 16
Duration and effect of banning order
Mr Thomas
I understand the concern about civil and criminal law and the first-tier tribunal as opposed to the magistrates court, but if a landlord were taken to the magistrates court and convicted of poor practice towards a tenant, why could the magistrates court not refer the case to the first-tier tribunal to consider the rent repayment order? At least in that way, it would achieve the spirit of what the amendment tabled by my hon. Friend the Member for Erith and Thamesmead seeks to tease out.
Mr Jones
I hear what the hon. Gentleman says. In that regard, as he knows, the magistrates court can hear the case. If the court decides that the person who has breached the banning order is guilty, it can impose a criminal sanction against the individual or individuals involved through a fine or, as I mentioned earlier in my comments, a prison sentence. We must draw a distinction between that and a civil penalty that can be applied for in the county court. At that point, as he knows, local authorities can bring the civil action to trial and obtain a rent repayment order.
The hon. Gentleman’s point is interesting and requires further consideration. I am thinking through the matter on my feet, but it requires more careful consideration, and I am certainly willing to listen to his comments and take them away from the Committee.
Mr Thomas
I beg to move amendment 94, in clause 17, page 10, line 27, leave out subsection (7).
This amendment would ensure local housing authorities would be able to retain any financial penalties recovered under Clause 17.
I hope that the Minister continues to feel in a sufficiently good mood to consider this amendment with enthusiasm. If he wanted to intervene on me very early on and say that it is indeed his intention that local housing authorities will be able to retain any financial penalties recovered under this clause, clearly I would not need to dwell any further on the case for the amendment. As he has stayed firmly in his seat, focusing on his notes, let me make the case a little further. Quite rightly, the Minister alluded to the fact that, as a result of this legislation, it would be incumbent on housing authorities to take action whenever they see a rogue landlord in action and can gather evidence of malpractice. I suggest to him and to the Committee that we have to live in the real world. In a case of declining budgets and cuts, local authorities on occasion have to make tough choices, and it may be that other parts of a housing authority’s responsibilities have to take precedent. Although some prosecutions may take place, there may be other prosecutions that might not go ahead, if additional resources are not available.
My amendment seeks to ensure that the resources that are recovered as a result of clause 17 go to the housing authority, so that they can be invested in action against rogue landlords, and so that there can be confidence that we will see progress in getting the Minister’s figure of 10,500 rogue landlords down to a better limit, more quickly. It cannot be that any of us would want to have such a large figure of rogue landlords operating, feeling that they can do so willy-nilly and that if they get taken to task by the courts, that will almost be by accident. I think the Minister said that he expected just 600 cases a year as a result of the new legislation. That suggests that it will take us a very long time before we can eliminate the full list of rogue landlords.
I give credit to the Government for wanting to bring forward legislation to deal with the issue, but I gently suggest that we need to make sure that those we are going to vest with legislative power to do more against rogue landlords have the resources available to them, so that they have the means to take action and use these powers. My humble amendment perhaps offers a small glint of light to hard-pressed housing authorities that there will be some additional resource that they might get as a result of their efforts to bring bad landlords to justice, which they can use to reinvest in taking further measures against other rogue landlords.
Mr Jones
The amendment, as drafted, would have the effect of removing the power to make regulations specifying how local authorities are to deal with fines received under this clause. I have looked at the clause put forward by the hon. Gentleman and I think there is a little confusion. He refers to “fines” within his clause, but I think he may mean civil penalties. That said, local housing authorities will be able to retain the penalties that they receive as income. Under subsection (7) the Secretary of State may make regulations specifying how financial penalties recovered under clause 17 are to be dealt with. Broadly speaking, we envisage that such sums should be used in connection with an authority’s private housing sector function, but we will discuss the details of how the income is to be applied with the key interested bodies before we make those regulations.
Mr Jones
We are saying that those penalties should go to the local authority. We want to consult with interested bodies, particularly the local authorities, in relation to how we make these regulations and how they work; whether we ring-fence or not and whether the money is put toward the private rented sector housing function of an authority or not.
As I have made clear, our intention is that the money that is recovered should be used. This is the basis on which we shall discuss this with interested parties: it should be used for the private rented sector housing function within the particular authority in question.
Mr Thomas
In the spirit of the Minister’s response, I see no reason to press the amendment to a vote. Consultation is a wonderful thing, but I struggle to see why the Minister needs to consult. Why can he not write it clearly into the legislation that the money recovered will go to the local authority? However, I recognise that is the Government’s intention and I welcome the clarification. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Jones
Clause 17 provides that the local housing authority that made the application for a banning order may impose a financial penalty against the person for whom it was made, if that person is in breach of the order. Subject to the right of appeal, the financial penalty that can be imposed for a breach is at the discretion of the local housing authority. As I said previously, that is subject to a maximum of £5,000. However, under subsection (4), if that breach continues for more than six months, a further penalty can be imposed in respect of each additional six-month period. This would mean, for example, that if a landlord had been granted an exception for six months, as referred to in clause 16(4), to bring existing tenancies to an end, but at the end of that period had not done so, the landlord would be subject to the first financial penalty. However, if six months later he had still not brought the tenancy to an end, he would be subject to a second financial penalty.
Under subsection (7) the Secretary of State may make regulations specifying how financial penalties recovered under the clause are to be dealt with, as we discussed in the debate on amendment 94. Broadly speaking, we envisage that such sums should be used in connection with the authority’s private sector housing functions.
Question put and agreed to.
Clause 17, as amended, accordingly ordered to stand part of the Bill.
Schedule 1
Financial penalty for breach of banning order
Amendments made: 50, in schedule 1, page 70, line 5, leave out “for breaching a banning order” and insert “under section17”
This amendment is consequential on NC3.
Amendment 51, in schedule 1, page 70, line 10, leave out “person’s breach of the banning order” and insert “conduct to which the financial penalty relates”
This amendment is consequential on NC3.
Amendment 52, in schedule 1, page 70, line 11, leave out “in breach of the banning order” and insert “continuing to engage in the conduct”
This amendment is consequential on NC3.
Amendment 53, in schedule 1, page 70, line 11, leave out the second “breach” and insert “conduct”
This amendment is consequential on NC3.
Amendment 54, in schedule 1, page 70, line 13, leave out “breach” and insert “conduct”
This amendment is consequential on NC3.
Amendment 55, in schedule 1, page 70, line 15, leave out “breach” and insert “conduct”—(Mr Marcus Jones.)
This amendment is consequential on NC3.
Question proposed, that the schedule, as amended, be the First schedule to the Bill.
Mr Jones
The clause provides that a local housing authority can ask a person to provide certain information in order to decide whether to make an entry in the database in respect of that person. That information may include details of previous convictions for banning order offences committed by that person, or any banning orders that have previously been made against the person.
The clause also provides that the authority can ask for information to make and keep the entry up to date. That may include details of the properties owned, managed and let by the person, subject to the entry, and requiring information to be provided about matters such as changes of address of the person entered on to the database, their trading name or their portfolio of properties.
Mr Thomas
I welcome the clause but wonder whether it goes far enough. For example, will the power to require information to be provided for the purpose of entering somebody on the database be extended to HMRC—is it already having to provide information to make a judgment? Where a housing authority is not sure whether someone else is part of an organisation that is acting as a rogue landlord, will it be able to be subject to the same power to require information as someone who is clearly the main focus for this particular power? Will it just have to be directed at one person, or can other people be covered by it; and are a series of other public bodies going to be covered by the power to require information as well?
Mr Jones
I thank the hon. Gentleman for his questions. Before I conclude my remarks on clause 29, I will respond to them.
Subsections (3) to (5) provide that it is an offence not to comply with a request for information or to provide false or misleading information in respect of such a request. If convicted of an offence, the person is liable to be fined. The hon. Gentleman has tried to broaden this out a number of times—earlier he asked for other organisations to have involvement in this process. As I said earlier, however, this is a power for local authorities only. It is not a matter for the tax authorities and therefore HMRC would not have the information.
Mr Thomas
I understand the Minister’s point. If the housing authority has suspicions that an individual may be a rogue landlord, they might be able to make a better judgment about where a person’s income is coming from, how extensive their assets are, and so on if they could access information from HMRC. Under this clause, could the planning authority make a request of HMRC and expect HMRC to have to respond to provide that information?
Mr Jones
As I said before, the power that the hon. Gentleman refers to is only vested in local authorities; but I am aware that housing authorities can speak to organisations such as HMRC and request information, if that information enables them to further a case that they may have against a person, persons or company.
Mr Jones
Let me put it this way: the actual banning orders made by the lower-tier tribunal will be public information, but because of data protection laws, the register of rogue landlords will only be available to local authorities on the nationwide database that I mentioned earlier. The information will also be available to the Secretary of State, but that will only be available for statistical and research purposes. The Committee will be covering this matter in more detail when we discuss a later amendment.
Mr Thomas
I am grateful to have the opportunity to speak on the stand part debate. I would not want to give the impression, Sir Alan, to you or to Conservative Members, that I oppose the clause. I think it is a worthwhile additional power. It prompts the question, though, whether housing authorities will be able to have enough access to potential sources of information about possible rogue landlords. I used the example of HMRC, but perhaps the example of the banks might be an appropriate one to offer up. The potential rogue landlord must have a bank account somewhere, so could Harrow council, wanting to exercise its powers here to crack down on any rogue landlords operating in Harrow, use this clause to go to HSBC or Lloyds Bank and say, “We have real concerns about individual X being a rogue landlord, but we need to check out what their level of income is and where that income appears to be coming from. Could you provide the following information to us?” I would have thought that that is a reasonable request from a housing authority wanting to get a grip on these 10,500 rogue landlords the Minister spoke about, some of whom, presumably, must be in each of our local authority areas. If we are really going to crack down on this and take it seriously, as I know the Minister wants to do, we have to make sure that housing authorities have all the powers they need.
If the clause does not cover the potential for a housing authority to make a reasonable request and expect that body to provide information back, the Minister might want to reflect before Report on whether the scope of the clause needs to be broadened. I think of constituents of mine who have got in touch with HMRC and have struggled to get a coherent answer back. Of course, the local housing authority can put in a request now, without any additional powers, but there is no guarantee that HMRC would reply in good time for that housing authority to make a judgment as to whether a rogue landlord is operating in their vicinity. I ask the Minister to reflect. We would expect a rogue landlord to have had some dealings with HMRC. We would certainly expect a rogue landlord to have bank accounts or to have had some history of dealing with the big banks. Why should the housing authority not be able to engage with those bodies and expect sensible, serious answers to their requests for help about named individuals?
Mr Jones
I thank the hon. Gentleman for his remarks. I do not think it is an unreasonable request that I consider his comments, particularly in relation to data sharing and HMRC. However, much of the data sharing and much of the evidence he talks about would, of course, have been obtained and presented to the first-tier tribunal when the original banning order was made. Obviously, this register is to convey that information, but I will certainly reflect on what the hon. Gentleman says before Report.
Question put and agreed to.
Clause 29, as amended, accordingly ordered to stand part of the Bill.
Clause 30
Access to database
Mr Jones
I thank my hon. Friend for Wimbledon for the amendment and for his comments. In my years in this House, I never thought it likely that my hon. Friend the Member for Wimbledon could be a comrade of the hon. Member for Harrow West, but the hon. Member seems to think that they may be compatible. I am sure my hon. Friend has his own views on that point.
Mr Jones
Let me make some progress. Amendment 79 would allow the Greater London Authority access to the database on rogue landlords. We would be happy to grant the GLA access to the data for statistical and research purposes, however we would need to ensure that access was on an anonymised basis given that the database contains information about the relevant offences of which persons have been convicted, as well as details of properties owned. The data fall within the definition of “sensitive personal data” as set out in the Data Protection Act 1998 and may only be shared with organisations where strictly necessary and where at least one of the conditions set out in schedules 2 and 3 to the Act is met.
I would like to reassure my hon. Friend—and taking into account the comments made by the hon. Member for Harrow West—that we are taking on board the points that have been made today. We will give the matter further thought and I hope on that basis my hon. Friend will withdraw the amendment.
Mr Thomas
I am grateful for the opportunity to speak again. I do not understand why the Mayor of London should be such a controversial figure for the Minister not to want to share information. I appreciate there needs to be a bit of thought, and I appreciate that the Minister of State has been a bit grumpy today and that may be precluding the Parliamentary Under-Secretary’s room for manoeuvre. However, I hope the hon. Member for Wimbledon will be sufficiently robust in his attitude to the Minister’s answer to fight the cause for London and say that we need to make a decision now to strengthen the London rental stake.
Mr Thomas
The hon. Gentleman is enthusiastically welcoming me drawing the Committee’s attention in this context to why it would be relevant to the amendment. I understand that Finsbury Park is near Islington. Why should prospective tenants in Islington not be able to see whether a property they might be moving into is owned by Mr Antoniades? A further example of a rogue landlord is Leonardo Ippolito in Ayr, western Scotland, who was accused by his local council and successfully prosecuted for operating houses of horror, choosing to put profit above everything else. South Ayrshire Council banned him from operating as a landlord.
The next name will be of interest to the Minister of State. At Great Yarmouth magistrates court, Stanley John Rodgers was convicted of manslaughter and jailed for five years after two of his tenants, both teenagers, died from carbon monoxide poisoning. He was able to continue operating as a landlord, but if the Government accept my hon. Friend’s amendment, prospective tenants will be able to see whether the property they are moving into might be owned by this rogue landlord and make a judgment on whether to move in.
Zuo Jun He made more than £26,000 a year by squeezing 12 tenants into a flat above a Chinese restaurant in Watford. He was fined £30,000 plus almost £6,000 in costs after pleading guilty to overcrowding. Again, why should his name not be put on the database and, crucially and more importantly in the context of the amendment, why should prospective tenants in Watford not have the opportunity to see this gentleman’s name on the database and decide whether to take the risk of moving in?
I am sure the hon. Member for Peterborough will be delighted that I intend to mention Andrew Panayi for a second time. He is a controversial landlord who lets out 180 properties on the Caledonia Road near King’s Cross, which is definitely in the Islington area. He was ordered to pay £70,000 under the Proceeds of Crime Act 2002. Again, why should prospective tenants not be able to look at the database that is being established under clauses 30 and 31 and see, as a result of my hon. Friend’s amendment, whether they are likely to be moving into a property owned by someone judged to be a rogue landlord?
My hon. Friend’s amendment is extremely sensible and I urge the Government to accept it. If Government Members have not got the point, perhaps I should mention one more rogue landlord, or perhaps two. Katia Goremsandu was described as the UK’s worst landlord when it emerged in July that she had been convicted seven times for housing offences. Again, why should prospective tenants not have access to the information on the database to see whether they would be at risk of moving into one of her properties?
Last week, according to Reading Borough Council, Ishaq Hussein rented out a house that had no working fire alarm, no firefighting equipment or emergency lighting and inadequate fire escapes, placing tenants at risk of serious injury or death. Why should the information it holds on the database not be available to prospective tenants in Reading so that they can see whether there might be a risk of them moving into a property owned by Mr Ishak Hussein? My hon. Friend has tabled a sensible amendment and I urge the Minister to accept it.
Mr Jones
For more than three hours and in debating more than 20 clauses, the Committee has worked in a spirit of consensus, recognising that the Bill will make a significant difference to the 3.2% of people renting out property to tenants in the private rented sector whom we know as rogue landlords. Members on both sides have acknowledged the serious approach the Government have taken in the provisions. It is slightly disappointing that, in the amendment, Opposition Members seem to have cited the most extreme cases that they can find on this very important issue as reasons that the amendment should stand. As I said earlier, in the most extreme circumstances, the person or persons renting out property and being the worst type of rogue landlords will be subject to lifetime banning orders. The instances that Opposition Members mention will not come to pass because many of those people will be banned for life.
In terms of data protection, which I will come to in more depth in a moment, Opposition Members have suggested that the register of rogue landlords should be made available to Members of this House. As all Members know, we are subject to the provisions of the Data Protection Act 1998—passed into law by the Labour party—and on that basis we are not allowed to pass the personal details of our constituents to a local authority without their consent. I find it difficult to understand where they are coming from on that point. Perhaps we need to consider further the point about freedom of information made by the hon. Member for Harrow West. There are exemptions for releasing personal information in the freedom of information regime.
Mr Jones
I will make some progress first. The amendment would allow tenants and prospective tenants to access the database of rogue landlords and agents via their local authority. While this access is mediated by the local authority there are data protection issues which would have to be carefully considered before allowing such access. The database is not a list of banned landlords and agents, instead it is an enforcement tool for local authorities, enabling them to share information across boundaries efficiently and target enforcement activity. The offences that could lead to inclusion on the database vary considerably in their seriousness and in some cases may be spent before the minimum two-year period on the database has ended.
Inclusion on the database should mean that local authorities keep a close eye on a landlord’s activities, but it is not intended as a ban, and opening access to the database in that way might prevent a landlord included on the database from operating their landlord business. That would be a ban in practical terms, but without proper scrutiny provided by the tribunal, which will consider all the facts and take a decision on whether to issue a banning order. It is right that banned landlords are unable to operate a landlord business, but it is not right that anyone included on the database should be prevented from operating their business. On that basis, I hope that the hon. Lady will agree to withdraw her amendment.
Mr Thomas
I am grateful for the opportunity to speak to clause 31. Again, I want to probe the Minister’s intentions, rather than suggest that the clause should be deleted. Following the decision on clause 30, the database applies only to housing authorities in England. I want to ask two questions. First, if housing authorities in Wales, Scotland or Northern Ireland have suspicions that rogue landlords operating in their area are active in a part of England, will they be able to provide or seek information under clause 31 to help them make a judgment about the use or otherwise of their own legislation to crack down on rogue landlords in those other nations?
My second question relates to the information on the database and whether it might be used by bodies other than housing authorities. This is almost the reverse of the point I was making earlier about banks and HMRC. If a rogue landlord is operating, it is possible that their behaviour will have come to the attention of HMRC, which might want to gather information for a prosecution. Under clause 31, would any information from particular housing authorities that is on the database be available for use by HMRC and other public authorities?
Similarly, would the information be available to private sector bodies that fulfil a purpose of benefit to the community? Perhaps oddly, I mention the example of banks: would rogue banks that want to prosecute an individual, or that are worried that a rogue landlord is perpetuating a fraud against them, be able to access information in the database? I come back to a point I made earlier about freedom of information: would banks or other private sector bodies be able to use freedom of information requests to access data on the database? Under certain circumstances, I would instinctively be comfortable with other public bodies being able to access such information, particularly if they were trying to ensure that proper levels of tax were paid. In some cases, I might be comfortable with banks being able to access some of the information in certain circumstances, but in other cases I would not.
It would be helpful if the Minister could spend a little time dwelling on those two issues. Will housing authorities in the other nations of the United Kingdom be able to access information in the database in any way? There is probably merit in trying to ensure that information about our rogue landlords, who presumably operate across borders in the UK, could be shared with housing authorities in Northern Ireland, Scotland and Wales. Will other public bodies and certain private sector bodies be able to access the information in the database? I look forward to the Minister’s response.
Mr Jones
Clause 31 sets out the purposes for which the information in the database can be used. It provides that the Secretary of State may use it only for statistical and research purposes. For example, that might include using the information to help to monitor the effectiveness of the legislation and to develop Government policy for the private rented sector.
Local housing authorities may use the information only for specified purposes, including for carrying out their functions under the Housing Act 2004—for example, to identify whether a property should be licensed under that Act. The information can also be used to promote compliance with the law by persons entered on the database—for example, by providing advice or training on the law and/or best practice. It may also be used to investigate whether there is any contravention of the law by a person on the database. That could include, for example, an investigation into whether a person has breached a banning order or carried out an unlawful eviction. Such information may also be used for the purpose of taking proceedings against persons on the database for banning order offences or other contraventions of housing or landlord and tenant law. The information may also be used by local authorities for statistical or research purposes.
In response to the hon. Member for Harrow West, housing, as he knows, is a devolved issue in Scotland, Wales and Northern Ireland, but I understand where he is coming from. It is something that we could consider, but I heavily caveat that on the basis that this part of the Bill relates to England only. I will certainly take that point away with me from today’s debate.