Helen Jones
Main Page: Helen Jones (Labour - Warrington North)Local Government Finance Bill
Helen Jones Excerpts(12 years, 11 months ago)
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Helen Jones (Warrington North) (Lab)
I beg to move amendment 20, page 2, line 13, leave out ‘2013’ and insert ‘2014’.
The Chairman of Ways and Means (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following: amendment 21, in clause 2, page 2, line 19, leave out ‘2013’ and insert ‘2014’.
Amendment 22, in clause 3, page 3, line 21, leave out ‘2013’ and insert ‘2014’.
Amendment 23, in clause 4, page 3, line 35, leave out ‘2013’ and insert ‘2014’.
Amendment 24, in clause 5, page 4, line 5, leave out ‘2013’ and insert ‘2014’.
Amendment 25, in clause 6, page 4, line 22, leave out ‘2013’ and insert ‘2014’.
Helen Jones
We have tabled these amendments because we are concerned about the way the Bill is being rushed through the House and, should it be enacted, the short time allowed for its implementation. Understandably, the Bill deals with difficult questions. It is not easy when dealing with local government finance to resolve exactly where the line should be drawn between central and local government, how far services should be uniform and how far we are prepared to tolerate variations in them. I accept that the Government carried out a consultation before bringing in the Bill, but the problem is that the Bill seems to reflect little of that consultation.
In addition, the Bill is being taken through the House at a break-neck pace. It was published on 19 December, just before the Christmas recess, and had its Second Reading on 10 January, which was the first day the House returned and only two sitting days later. Instead of sending the Bill upstairs to Committee, where we could have taken evidence, which we cannot do on the Floor of the House—that is the important thing about Public Bill Committees—the Government insisted that the Bill should be considered in Committee of the whole House in three days, and I think that it was originally meant to be two days.
Why are the Government so worried about taking evidence upstairs in Committee? They might be a little worried about what they could hear, because the truth is that local councils, having started to look at the Bill in detail, are particularly concerned about the speed of implementation for its provisions and are struck by the number of powers being given to the Secretary of State.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that another possible motive for considering the Bill on the Floor of the House is the coalition Government’s botched programming of business for this Session and the fact that, were it not being considered here, there would be little to be heard in the Chamber?
Helen Jones
My hon. Friend makes an extremely good point, which I will come to in a moment.
If the Bill comes into force, one extremely complex system will be removed and replaced with another extremely complex system, without time for local authorities to prepare for it.
John Healey (Wentworth and Dearne) (Lab)
Before my hon. Friend moves on from the question of evidence, I do not want her to overlook the value of such evidence. Does she agree that democracy works better when a wide range of organisations has an opportunity to contribute effectively to our discussions? Evidence sessions in a Public Bill Committee give organisations that represent people with a wide range of interests the chance to assess, analyse and propose amendments to improve legislation. That stage will be sorely missed because of the way in which the Government are handling the Bill.
Helen Jones
I could not agree more with my right hon. Friend. Since I have entered this House, I have learned that the best way to improve legislation is to scrutinise it effectively and listen to those who will have to deal with it when it comes in. If the Government chose to take evidence, they would have ample opportunity to table amendments to the Bill in Committee or on Report.
Mr Robert Syms (Poole) (Con)
There are 650 Members of Parliament, many of whom are former councillors. There is a good body of experts in this Chamber. I welcome what the Government are doing. It allows people to have their say.
Helen Jones
I am grateful to the hon. Gentleman for that point. Although he is correct in saying that many of us have been local councillors, I point out to him, with all due deference because this applies to me as well, that many of us were local councillors some time ago and that the system of local government has altered in the time since. It would be beneficial for the House to hear from those who are running local councils now. I sincerely regret that we have not had time to do so.
Graham Stringer (Blackley and Broughton) (Lab)
My hon. Friend is making an important point. I have always found local government slightly more complicated than quantum mechanics.
Graham Stringer
Well, a lot more complicated. Does my hon. Friend the Member for Warrington North (Helen Jones) agree that the last time a Conservative Government had a major reorganisation of local government finance, they ended up putting VAT up for ever and costing the country £20 billion per year?
Helen Jones
My hon. Friend, who is a distinguished former leader of a local authority, makes a valid point. I agree with him on one thing: local government finance is exceedingly complicated. For that reason, it might well have been useful to hear in Committee from people such as finance officers in local authorities who will have to deal with this procedure from day to day. They might well have been able to suggest technical amendments that would have been beneficial to the Committee and which, if we are honest, are beyond the expertise of most hon. Members.
George Hollingbery (Meon Valley) (Con)
Will the hon. Lady remind the Committee how many months of extensive consultation the proposals for the Bill have gone through before this stage and how many changes to the scheme were proposed and then adopted?
Helen Jones
The hon. Gentleman should recognise that it is not much use having a consultation unless it informs the legislation. [Interruption.] Local authorities say that it has not. A second process, which many Members have found useful, is to allow people to give evidence on the exact wording and form of the Bill once it has been published. I believe that if we are serious about the legislation that we introduce in this House, it is right and proper to give people the opportunity to do that. People have not had time to do so with this Bill because we are not having evidence sessions in Committee. The House introduced such evidence sessions because it was believed that they would improve legislation. It is a pity that the Government have decided to miss them out.
Helen Jones
I am inundated. I will give way to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford).
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
Is it not very clear to my hon. Friend and to Government Members that there is something slightly odd about a Bill that is supposed to give benefits to local government arousing considerable anxiety and concern in local government, as we have seen in the briefings that we have received? Is that not clear evidence of the need for further thought and attention to the detail to ensure that we do not end up with a disaster that is problematic for local government, rather than a measure that gives greater discretion and benefits to local government?
Helen Jones
My right hon. Friend makes a very good point. In delivering local services, we are meant to be partners with local government. It is right and proper that the House has an opportunity to take on board the views of local government on the legislation.
As my right hon. Friend is a London Member, perhaps I may read out what London Councils says:
“The retention scheme as written is extremely complex and does not, in our view, incorporate adequate reward and incentive for local authorities. London Councils believes that the Government needs to urgently rethink the business rate retention scheme that it has set out in the Bill.”
If we had had a proper Committee stage upstairs, we could have taken evidence on that matter, considered technical amendments and debated them properly. It is a shame that we are not doing so.
Chris Bryant (Rhondda) (Lab)
I agree with my hon. Friend completely. We are only doing things in this way because the Government do not have enough to fill our days. Since we have the innovation of the whole Committee stage on the Floor of the House, could we not have another innovation of having witnesses before us? There is a special place for them at the Bar of the House. We could devote one day, or perhaps additional days, to hearing exactly what those in local government think about the legislation.
Helen Jones
My hon. Friend, as usual, makes an interesting point, but he is tempting me to go beyond my remit and discuss the procedures of the House. Perhaps the Procedure Committee could look at that point.
John Healey
Before my hon. Friend moves off the question of procedure, does she agree that it is important that we do not lose sight of the fact that the introduction of evidence sessions as part of the Public Bill Committee process, as opposed to the Standing Committee process, was one of the good reforms of the previous Parliament? The hon. Member for Poole (Mr Syms) is right that there is useful expertise across the House from Members with a background in local government. However, unlike the previous consultation and the public statements of Ministers, evidence sessions would give members of the Committee and Members who are following the legislation time and help in getting to grips with the content of the Bill. It serves our purpose, as well as the wider purpose of better legislation, to have those evidence sessions and not to put them to one side, as the Government are doing in this case.
Helen Jones
My right hon. Friend is right. We do have a lot of expertise across the House, but we need up-to-date and informed expertise, which is what evidence sessions give us.
Graham Stringer
On a point of order, Mr Hoyle. I was interested in what my hon. Friend the Member for Rhondda (Chris Bryant) said. Will you advise the Committee on how it could hear from witnesses in its sittings on the Floor of the House?
The Chairman of Ways and Means (Mr Lindsay Hoyle)
There is no procedure to do that in Committee of the whole House. Mr Bryant was taking the hon. Lady away from the subject that is before us.
Helen Jones
I will just make a little progress.
Councils are expected to prepare for the changes that the Bill will bring in without knowing exactly what they are preparing for. This is an enabling Bill and we have not seen any draft regulations to go with it. In the Government proposals, there is no guarantee that councils will not be worse off after the first year of the scheme. Councils do not yet know what percentage of business rates they will be allowed to keep. They do not know how the levy will be set, nor who will qualify for a safety net payment and in what circumstances. They do not know what their business rate baseline will be.
Bill Esterson (Sefton Central) (Lab)
My hon. Friend is making an incredibly important point, which cuts to the heart of the matter. The Government say that they are in favour of localism, yet they have created a Bill in which the Secretary of State retains many powers. As my hon. Friend says, those powers are not defined, so it is not clear whether local government will keep business rates and how much it will keep, or whether and when the Secretary of State will intervene.
Helen Jones
My hon. Friend makes a powerful point. As the Bill progresses, we will table amendments to attempt to clarify some of those matters. However, at the moment, local authorities are in the dark about what they will deal with next year, if the Bill is passed.
Alison Seabeck (Plymouth, Moor View) (Lab)
As with so much legislation under this Government, whether in Committee or on the Floor of the House, we are being asked to consider the Bill blind. We are not given the background information that we need—for example, the national planning policy framework in the case of the Localism Bill. Does my hon. Friend agree that the Bill, like so much current legislation, is therefore likely to form part of the logjam in the other place at some point further down the line? The amendment makes enormous sense, because the last thing we want is legislation stuck in the other place, and, in this instance, for the timetable to be missed.
Helen Jones
My hon. Friend makes an important point about our not seeing the draft regulations. It is difficult to debate the Bill properly without them and it also makes matters difficult for local authorities. Moreover, the measure is a carry-over Bill. The Government have got themselves into such a mess with their legislation backing up in the Lords that they cannot, even with the extended Session, guarantee that the Bill will get through before the Queen’s Speech.
Chris Bryant
May I pull up my hon. Friend on one point? She referred to councils, but she means councils in England. Is there not a particular irony here, in that the Conservative party has spent the past few years campaigning for English votes for English folks in the House, yet by holding the Committee stage on the Floor of the House, Welsh Members of Parliament are almost required to take part in the process when otherwise they would not be allowed to do so?
Helen Jones
My hon. Friend makes an interesting point, although I have never known him to need any pushing to take part in any process in the House—thankfully, because he contributes so much.
The Bill is hugely complicated, local authorities do not know what faces them, and the measure will not get through until the next Session. On the Government’s timetable, the Bill must get Royal Assent by July. That means that regulations may not be put before the House until after the Bill has finished its passage. The House will rise earlier than usual this year because of the Olympics, which means that they may not be put before the House until the autumn. That causes real difficulty for local authorities, because it leaves so much uncertainty about what they will have to deal with.
John McDonnell
I feel a bit like Banquo’s ghost in this debate because I was chair of finance on the Greater London council, whose expenditure tipped Mrs Thatcher over the edge and into nationalising the business rates. There are real problems with the complexities of the Bill, as set out in the briefing from London Councils. It is difficult for individual Members of Parliament and individual local authorities to work out the implications for one’s area. Although we cannot receive witnesses on the Floor of the House, as the Deputy Speaker said, the Government have introduced a procedure whereby we can pause a Bill to enable us to undertake further consideration and consultation with the relevant interested parties. Perhaps the Government could consider that at some point during the day. We might want to pause the Bill and come back to it later, after more detailed discussions with interested parties.
Helen Jones
I am grateful to my hon. Friend for reminding us of two things: that a Conservative Government nationalised business rates and the idea of a pause. The Government are in such a mess with most of their legislation that the whole lot could probably do with a pause while they rethink.
Let me revert to the uncertainty for local authorities. They have made it clear that they are concerned about the short time they will have, following the passage of the Bill and the regulations that go with it, to make changes to their systems. London Councils said:
“All of these changes will require substantial changes to systems and processes at the local level, and we are extremely concerned that not enough time is being allowed for all of these policies to be properly thought through and implemented.”
I could not put it better myself.
Local authorities are being asked to cope with not only changes to non-domestic rates, but the localisation of council tax benefit at the same time. That will require new IT systems, which are unlikely to be ready, and more changes to local council revenues.
Alison Seabeck
There are only three, possibly four companies in the UK that are capable of producing the sort of software that local authorities might require. Clearly, they will have a capacity problem if they are faced with hundreds of local authorities wanting individual systems. That is concerning.
Helen Jones
My hon. Friend is right—there will be a capacity problem. Again, it would have been useful to hear witnesses from the relevant companies and consider the time scale they need.
Councils will also have to cope with changes to their revenue. It is likely that some people who receive a cut in their council tax benefit will not be able to pay, and collection rates will fall. That will affect some local authorities far more than others. The change also brings with it the possibility of more claims, because we are moving from perceiving something as a benefit to its appearing as a reduction in the council tax bill. All those with expertise in benefits say that it is likely that more pensioners will claim. That is a good thing, but local authorities need time to adjust their budgets because they face a 10% reduction in the amount of money available, coupled with protection for pensioners, and the possibility of more claims.
Mr Raynsford
My hon. Friend is making a powerful case. She is considering the changes to the benefits scheme and she highlights the fact that an increase in pensioners’ claims as a result of the changes would be a further problem for local authorities. Indeed, it will be a major problem for them, because they will not receive the funding to pay for it that they get under the current benefits scheme. They are being asked to budget in advance, with all the uncertainties, knowing that the downside risk remains with them if the financial position is not as good as they thought when they budgeted. There is no safety net in the benefits part of the system for authorities that find themselves in difficulty. That is a fundamental problem, which is arousing real concern in local government circles. It is extraordinary that the Government are not giving an opportunity for those serious problems to be understood.
Helen Jones
My right hon. Friend is, of course, right. Throughout the Bill, financial risks are transferred to local authorities. The Government set the system but transfer the financial risk elsewhere.
Let me return to the problems with IT systems. Earlier, my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) mentioned that only a few firms provide those systems. Interestingly, Capita has sent an e-mail to benefit and council tax managers to set out its concerns about the timing of the system. The manager who sent the e-mail writes:
“I think the most important point to make is that I remain concerned and disappointed that the timetable remains unchanged meaning that primary and secondary legislation will not be passed until the summer / autumn / winter 2012. Without the framework and detailed regulations underpinning both the local schemes and means for ensuring that pensioners now and in the future remain protected or treated equally, it is impossible to commence planning for software changes.”
That is the system with which the Government are expecting local authorities to cope.
There are other changes in the Bill—provisions on tax increment financing, on the rating of empty properties, and on exemptions from the scheme for renewable energy projects—for which local councils need time to plan, adjust their budgets and rethink the way they do things. Those measures require changes to how councils organise themselves and changes to IT systems. Many local authorities are making it clear that they believe the Bill does not give them sufficient time to prepare for those changes.
May I make a suggestion to the Minister—it is meant to be a helpful one? I try to be helpful occasionally even if the Whip is giggling away. Why not run the proposed system as a shadow system for one year to see how it works and iron out the glitches? Why not continue with the old system for a year but give local authorities an indication of what they would have received under the new system? That would allow any problems to be ironed out and the system to work properly.
Above all, the Opposition are saying that Ministers ought to take note of the people who must implement the changes on the ground—the people who collect the rates, who design the systems, who administer council tax benefit and deliver the services. If the Government rush the implementation of the Bill and it all goes wrong, chaos could result. They need to take the opportunity to test the system properly and to think things through. If they insist on introducing this hugely complex system, they need at least to give themselves time to run it properly and ensure that local councils can adapt their systems properly. That is why I have moved amendment 20 today. It might be helpful if I tell the Committee at this point that the Opposition intend to press the amendment to a Division.
Mr Syms
I, too, have been an Opposition politician. Opposition politicians often argue that Bills taken on the Floor of the House really ought to be taken in a Public Bill Committee; and when there is a Public Bill Committee, they argue as eloquently as possible that the Bill ought to be taken on the Floor of the House. When Opposition politicians are not sure what to do about a Bill, one thing they say is that it has not been considered for long enough. They then try, as amendment 20 does, to delay the commencement date, because that is a good substitute for hearing their views on such reforms. If they can press an amendment, such as amendment 20, to a Division after a debate, that is very good, because in that way they cannot discuss some of the important issues in, say, schedules 1, 2 and 3. Perhaps we will end today not quite knowing where the Opposition are on some of those issues.
The reality is that we probably have the most centralised system of local government in the western world. The Bill is a step in the right direction for devolving power. Perhaps it does not go far enough, but we will doubtless see as the Committee progresses over its three days what assurances we get from the Minister on the pace at which the Government are going.
I am confident that the Government’s instincts are right. My experience of local government officials is that they must always second-guess central Government. Some are pretty good at it. Rather than prevaricating, if we are to change the system, the sooner we do so, the better. I therefore support my hon. Friend the Minister.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
It is a pleasure to see you in the Chair, Mr Amess. You and I know something of local government from our experiences of it over the years. We therefore know that the issue of local government finance has been around the houses, as we say in our part of the world, for a very long time. At long last, something is being done about it.
I say to the hon. Member for Warrington North (Helen Jones) that I do not accept the premise that underpins her arguments. Throughout this debate the Opposition have raised specious arguments and engaged in manufactured indignation. The reality is that the Government are bringing forward a serious and important reform, which the Opposition are seeking to delay. That is not in the interests of local government, who suffer under the thoroughly unsatisfactory, opaque and unfair system Labour bequeathed, which denied local authorities the opportunity to have a portion of the business rates localised for their benefit. The Opposition want to delay the introduction of a valuable growth incentive for local government, which would also encourage national growth, so be in the interests of the national economy.
Robert Neill
Let me make a little more progress first.
It is a little cheeky of Opposition Members to say that this change is being rushed forward. Much of the first part of the hon. Lady’s opening speech was taken up with a complaint that somehow less scrutiny of a Bill is possible if it is considered on the Floor of the House, when every Member can participate, than if it is sent upstairs into Committee. Is there a precedent for that, however? Yes, as a matter of fact there is, and it was under the previous Government. Their Digital Economy Act 2010 had 50 clauses, three of which were taken on the Floor of the House. That did not happen in the early part of the Session either; instead, that contentious Bill was considered in the wash-up. I will not take any lessons from the hon. Lady’s specious arguments, therefore.
Helen Jones
As the Minister argues that it is important to get these provisions through quickly to provide incentives for economic development, what does he think local authorities would be doing after they are introduced that they are not doing now?
Robert Neill
The hon. Lady fails to grasp the basic principle underlying the Bill. The problem at present is that local authorities have no incentive to encourage growth. Instead, they potentially have a burden. They have no ability to grow the tax base.
Helen Jones
This interesting debate has had some detailed contributions from my hon. and right hon. Friends, many of whom have extensive experience in local government. All we have really heard from Government Members is the hon. Member for Poole (Mr Syms) saying, “These are the normal Opposition tactics.” It is quite right for an Opposition to highlight flaws in a Bill, and this Bill is full of flaws. The Minister gets very excitable but he has not provided an answer on these flaws. He will not provide an answer as to why it is so important to get these provisions up and running in 2013 and what local authorities would do differently in terms of economic development then from what they do now.
Robert Neill
Why did the hon. Lady’s Government never follow through on their election pledge and localise the business rate, when they had 13 years to do so?
Helen Jones
Coming from a member of the party that nationalised the business rates in the first place, that question shows real cheek. It is no good the hon. Gentleman getting so aggravated now when his party nationalised the rates in the first place.
The Minister will not answer questions on other points, either. He will not answer the question about the lack of certainty for local authorities in the provisions. He knows that it might not be possible to bring them in on time, and so does the Secretary of State, as clause 1 retains the power to delay implementation. If the Government were confident about being able to bring the provisions in at the right time, they would not need that power.
My hon. Friends have made the case very clearly for how complex and opaque the proposed change is, for the risks it poses to the whole local government system and for the unforeseen consequences that might result. I have heard nothing from the Minister to change our minds, so we will therefore seek to press the amendment to a Division.
Question put, That the amendment be made.
Robert Neill
I will endeavour to deal with the clause stand part debate as swiftly as I can. Clause 1 sets up the necessary part of the scheme. As is often the way with a finance Bill, it establishes the framework, which is then covered in the regulations. Schedule 1, which we shall come to shortly, sets out most of the detail. I suspect that the issues between us have largely been debated in relation to the amendment and the principle. I am happy to respond to any points that hon. Members may wish to raise.
Helen Jones
The Minister is right to say that the clause sets out the framework for the Bill, and that earlier we debated most of the issues between us. I welcome the fact that the regulations will be subject to the affirmative resolution procedure in the House. That is helpful, but we stick to our view that the Government are trying to introduce the provisions in the Bill too fast and that there is still a great deal of uncertainty for local councils. We will debate those issues on further amendments so I shall not detain the Committee now.
Annette Brooke
I want to place on record, in the debate on clause 1, how important it is to reform local government finance, to do it in a timely fashion and to do it in such a way that it both incentivises and equalises. Those principles are firmly embodied in the framework. We have heard it said that the retention of business rates will not incentivise. I wonder why the previous Government introduced LABGI—the local authority business growth incentives scheme—which rewarded local government for business expansion, but not very efficiently. It was not a built-in system, which has to be better. I therefore found some of the comments odd, in the light of that recent policy.
Mark Field
The hon. Gentleman has almost taken the words out of my mouth. Given the Government’s commitment to the big society and to empowering the organisations about which he has expressed concern, removing discretionary awards would be controversial, and—given that they account for only a small proportion of the business rates that are collected—of little use. I hope that we can be given some clarification about why the Bill fails to provide for any adjustment in the growth calculation to remove the negative effect on valuation appeals.
I do not wish to sound too negative myself. Obviously we are trying to make the legislation better, and I think that the principle of allowing local authorities to retain a greater proportion of the business rates that they generate in their areas is a positive step. Nevertheless, the detailed proposals relating to RPI increases, revaluation and physical growth fail to offer the incentives for growth in high-yield areas for which we had all hoped, and I fear that they may result in excessive penalties for such areas. I realise that Opposition Members may view the issue from the point of view of relatively low-yield areas, but I think there is a risk that high-yield areas will not receive benefits for themselves and that, as a consequence, the Exchequer will not receive them either.
Encouraging economic growth at any level is critical to the national economy. Local authorities are uniquely placed to provide incentives for growth in their areas, recognising what will work even in specific parts of a single authority area—I observe a great variance within the 6.5 square miles of my own constituency—and that creates a bedrock for the national economy. I hope that serious scrutiny will be given to the reasons for the Government’s proposals, in the light of some of their potentially negative implications for areas that would be expected to generate the most significant growth.
Let me take up the point made by the hon. Member for Denton and Reddish (Andrew Gwynne) about pooling. We are living in a climate in which it will become the norm. I do not wish to pre-empt discussion of an issue that I am sure will be subject to much criticism and debate on the Floor of the House in the years to come, but I suspect that there will also be a reorganisation of local government. I foresee that in particular for London. It currently has 32 local authorities as well as the City of London, and that situation may well be subject to radical reform in the near future.
I hope the Minister gives serious thought to encouraging the pooling of resources. As he will know, in my area the tri-borough arrangements among the City of Westminster, Kensington and Chelsea, and Hammersmith and Fulham have worked well in a number of respect, and it is to be hoped that that continues.
It is in the interests of central Government for there to be pooling, but I fear that the proposals in paragraph 9 of schedule 1 will serve to remove any form of incentive for it. I accept that there will be some additional costs, but pooling is the way forward for many local authorities and the Government should encourage it in this Bill.
I am broadly in favour of the proposals, but I hope the Minister gives serious consideration to the points I have made.
Helen Jones
It is a pleasure to follow the hon. Member for Cities of London and Westminster (Mark Field), who always has something interesting to say even though I might disagree with him.
My right hon. Friend the Member for Wentworth and Dearne (John Healey) gave an excellent speech, in which he set out the reasoning behind the amendments. Our amendments attempt to deal with important omissions in the Bill. There is no mention of levels of need, of the different capacities of local authorities to benefit from business rate growth, or of the different council tax bases of local authorities.
The Government present their case in a way that suggests that there is no difference among authorities, in that they all have the same capacity to raise income and have the same demands on them, and that if a local authority is struggling, it is its own fault and a result of its being lax, rather than of the conditions it has inherited. Everyone knows that that is a myth, but some people are deeply attached to it.
We must acknowledge that the current, admittedly complex, system of local government finance does at least try to take into account the relative needs of different communities and their differing abilities to raise revenue. The Government have sought to erode that in their current local government finance settlement, and the consequent significant reduction in resource equalisation has led to local authorities no longer being able to provide the same level of service by charging the same band of council tax. As a result, the delivery of core services in poorer areas has been hit particularly hard. Despite the Prime Minister’s repeated reassurances, we are not all in this together.
The point I have made is very important, because it is about the base from which this scheme starts. Let me make it clear that we are not against incentives for local authorities to grow their economies.
Mr Watts
Does my hon. Friend agree that her point is one of the reasons that the Government do not want any independent assessment of the implications of what they have already done and of what they now propose to do? An assessment would demonstrate that poorer authorities have got poorer and that the richer have got richer.
Helen Jones
My hon. Friend makes a valid point. When discussing the first group of amendments we said that the fact that this Bill is not going into Committee upstairs means that we cannot take evidence on anything. The Government mindset seems to be, “Let’s get it in, push it through and not bother to have any proper assessment of it.”
Mark Field
The local government finance system may not be quite as complicated as the Schleswig-Holstein question, but is it not a concern that it is none the less very difficult to find anyone who could seriously be said to be independent in this regard? Although I can understand some of the concerns outlined by the hon. Member for St Helens North (Mr Watts), having an opportunity to discuss this on the Floor of the House means that more Members can have their say, and that must be a positive step forward.
Helen Jones
The hon. Gentleman makes a fair point, although I do not believe it is impossible to find independent people in the sector and of course the Government could have taken the Bill into Public Bill Committee and taken evidence, and then had a long Report stage on the Floor of the House to enable Members to participate.
To go back to my point, we are not against providing incentives for local authorities, but we do not believe that this Bill goes about it in the right way. We believe that any system has to be fair and equitable, and must recognise that weaker local economies find it harder to achieve growth and need help to do so. The Government have signally failed to recognise their responsibilities in that regard and we are faced with a “Leave it to Pickles” Bill. The Secretary of State is going to decide who gets what on the top-ups, the tariffs and so on. That is all being left to regulations, with no indication given as to the factors that he will take into account. As I keep saying, there are no draft regulations for us to look at.
Mr George Howarth (Knowsley) (Lab)
I apologise for not being able to be here for the earlier part of the debate. My hon. Friend knows my constituency well. Does she agree that unless we make a provision along the lines of amendment 19, which deals with need, the capacity to benefit from business rate growth and the council tax base of the authority, areas such as Knowsley are likely to be badly penalised?
Helen Jones
My right hon. Friend, who has been a doughty champion of his constituency for many years, hits on exactly the point that we are trying to make: unless the distribution of the central and local share is based on a number of factors, inequality will be built into the system—indeed, it is built in already because of the starting point. We do not believe that this approach is good enough. The future of communities and of the services available, particularly to the poorest people in this country, cannot simply be left to chance. If the Government believe in fairness and really believe that they would take into account the factors we mention in any case in determining central and local shares, I cannot see why they would have a problem in accepting our amendment. After all, the Prime Minister and the Deputy Prime Minister told us during their now forgotten love-in back in May 2010, before the romance had gone and they started squabbling, that they
“will ensure that fairness is at the heart of…decisions so that all those most in need are protected.”
That is all we are asking for in this amendment and the others that follow it.
Unfortunately, the Bill does not provide that fairness. If it goes through as drafted, service provision will, as my right hon. Friend the Member for Wentworth and Dearne said, increasingly be based on the ability to raise local business rates and council tax. As council tax increases will often be subject to a referendum, most of the demand will be put on local business rates.
Mr Kevan Jones
Does my hon. Friend also recognise that, for authorities such as South Tyneside council, which has nearly 50% of its properties in band A—that compares with a figure of 2% for Kensington and Chelsea—the existing system makes it more difficult to raise any additional money from the domestic side of the rates?
Helen Jones
Yes, my hon. Friend is absolutely right. That is one of the reasons for including the council tax base as one of the measures that ought to be taken into account. I shall say a little more about that later.
Graham Jones
My hon. Friend is very generous in giving way and I am grateful for that. Let me extend that point and return to those made about shires and districts. Where is the incentive in a scenario in which there are a large number of band A properties, for which council tax cannot be used, and in which the receipt will be only 15%, such as in my district authority? It seems to me that the system has not been thought out.
Helen Jones
My hon. Friend has hit on another flaw in the Bill and that is one reason for our complaining earlier about it being rushed through. Such matters need to be considered in detail.
If service provision is to be increasingly based on the ability to raise local business rates and council tax, this Bill has nothing to say about the levels of need. For example, parts of the area I represent used to be heavily industrialised. It is now a mixed area because a new town was built, but part of it was a mining community and we had heavy industry. Many other local authorities have much worse problems than my area, but all those areas are still dealing with the long-term health issues linked to heavy industry and poverty. That is why in an area such as Halton, a neighbouring authority to mine, one in five of the population has a limiting long-term illness. That is why the north-east has higher levels of deprivation, child poverty and poor health than the English average. Sunderland, for example, has 34 neighbourhoods that are in the top 10% most deprived areas of the country. The legacy of poor health, deprivation and poverty is what many local councils are constantly striving to deal with. There is no lack of effort on their part or lack of will. The failure is not theirs, but results from a long industrial heritage followed by the collapse of much heavy industry in the ’80s and ’90s.
Graham Jones
My hon. Friend is making a very good point; there is a risk in the system. She mentioned Sunderland—not my area—and Nissan is a very large employer in that region. Who is to say that in five years’ time the company will still be present there?
Helen Jones
Indeed—my hon. Friend makes a very good point. Later, we will debate the provisions for safety nets and how the Bill can cope with risks.
Andrew Gwynne
Will not some of the disparities about which my hon. Friend is talking be exacerbated by the new system? The analysis from the special interest group of municipal authorities—SIGOMA—shows that there will be an absolute decline over the next two years in funding across all local authority areas, that by 2015-16 some of those authorities will have recovered their position and that by 2020 there will be a huge disparity between the most rich and the most poor.
Helen Jones
My hon. Friend highlights a real risk of the Bill. All the modelling shows that the gap between rich and poor will become wider. That is a problem because, in my experience, local authorities have worked relentlessly to tackle these issues and to regenerate their communities. It is a long-term project, however, and it is much more difficult in some areas than in others for a whole host of reasons, including poverty, a local authority’s inheritance, its location and so on.
Pat Glass (North West Durham) (Lab)
Some years ago, I was an assistant director of education in the city of Sunderland and, despite its massive challenges, the attainment of the children was well above that of their statistical neighbours and was close to the national average. That demonstrates that such places can have massive challenges but still deliver well for their communities.
Helen Jones
My hon. Friend highlights the role of local authorities in achieving such gains. I believe that those authorities are constantly working to improve things for their communities and that the assumption underlying much of this Bill—that they do not want to do that—is simply untrue.
Returning to the issue of need, Durham council spends more on older people than a similar council such as Surrey because it has higher levels of deprivation and ill health. That means not only that it faces a greater requirement for social care but that it has fewer people who are able to finance their own care. Fifteen times as many people per 1,000 population receive a community service in Durham compared with Surrey, and 2.4 times as many receive a home care service. That kind of variation in need exists right across the country.
A similar pattern can be seen with children’s services and the level of child poverty, which all experts estimate will rise as a result of many of the Government’s actions. In Hartlepool, 29% of children are in poverty, whereas in Newcastle the figure is 27%, as it is in Liverpool—more than 91,000 children. In comparison, the figure in Wokingham is 7%. I defy anyone to argue that there should not be some resource equalisation to deal with that, but nothing in the Bill requires the Secretary of State to take account of the level of need when he determines the central and local share of non-domestic rates.
Heidi Alexander
My hon. Friend is talking about the growth in demand for council services that might occur in future and about the need to have some way of assessing that growing demand. It is relevant to services such as adult social care, particularly elderly care, that the geographical distribution of older people in our country is not the same across every local authority. In the shires, for example, there will be more of an ageing population than in my local authority. Does my hon. Friend think it is important to find a way of assessing those differing growth rates in need, which are often for services that are highly resource-intensive?
Helen Jones
My hon. Friend makes the valid point that the need for all these services varies across authorities; more to the point it is not within councils’ control. A council cannot control how many elderly people are going to need social care, or how many children are going to need intervention from their children’s department. That is the real problem. There are huge variations in demand for children’s services and educational services across the country, and that is often linked with poverty. Middlesbrough, which is the ninth most deprived local authority area in England, has almost seven times as many children receiving free school meals as Wokingham. Almost all councils showed a huge increase in referrals and in the taking into care of children following the tragic baby Peter case, which we all know about. That was not under their control, but the differences between the numbers of children in care across the country are still stark. Surrey has 32 looked-after children per 10,000 population, whereas Wokingham has 22. In Middlesbrough, the figure is 104 and in Newcastle it is 100. In Liverpool, there has been a 60% increase in child safeguarding referrals since 2009-10, whereas the average national increase is only 10%.
Bill Esterson
I keep being struck by the tension between, on one hand, the Government’s stated support for localism and the retention of business rates that they want to bring in and, on the other, the retention of powers by the Secretary of State. My hon. Friend is describing extremely well the growing gap among different local authorities and it seems to me that unless the Secretary of State addresses the issues in amendment 19, he will not be able to avoid that growing gap. I cannot understand why the Government would not want to support amendment 19.
Helen Jones
My hon. Friend is right. His intervention highlights the fact that no matter how much we want to make local government finance simple, it is never going to be simple because of the variation in need and the difference in resources. There is a balance to be struck between simplification and unfairness, and we do not think the Government have got that balance right in the Bill.
Some councils are coping with huge demands on their resources. Some form of equalisation will be necessary if, for example, children in poorer areas are not to be placed at risk. The idea that children’s services or the care of the elderly should depend on the number of businesses persuaded to relocate to a particular area is difficult to get to grips with.
George Hollingbery
In the debate on Second Reading the shadow Secretary of State said that there were far too many points in the Bill where the Secretary of State could interfere. As I said earlier this afternoon, there are mechanisms built into the Bill that ensure that revaluation and re-rating will take place. We can quibble about the date, but there are provisions to do that. There are safety nets built in. There is also at the first setting of this level of support a built-in bias towards communities that need more, as there should be. A calculation that I did showed that there was one public sector worker for every 88 people in Hampshire, because there is much less deprivation there, and I understand that, but one public sector worker for every 19 people in Manchester. Where we start clearly reflects the level of need.
Helen Jones
I know the hon. Gentleman made a thoughtful speech on Second Reading, but he is wrong on both counts. First, there is nothing on the face of the Bill about resets. Secondly, resetting the whole system is different from the way in which the system is run in the meantime. The baseline has nothing to do with the number of public sector workers anywhere. The baseline is the current local government financial settlement, which we argue is completely unfair to many local authorities anyway.
Andrew Gwynne
Because many of the children’s services that my hon. Friend mentioned are statutory, is it not the case that local authorities will have to find the money to provide them? The real pinch will come in the budgets for non-statutory services. There will be huge differentials from local authority to local authority, with some able to provide libraries, parks and other wonderful things, and other local authorities barely able to make their statutory arrangements.
Helen Jones
Indeed. My hon. Friend hits on a point that is important to local government as a whole. Local authorities cannot avoid their statutory responsibilities, so other services are squeezed. In future we may well see richer authorities developing a Pickles park here and there and naming public libraries after this beneficent Secretary of State, but it will be very hard for other authorities.
We have included unemployment in the factors that the Secretary of State must take into account. There are a number of reasons for that. Unemployment increases ill health, it forces more families into poverty, and it is an indicator of the state of business in an area. But high levels of unemployment also increase the demand for local authority services. As one of my hon. Friends said earlier, it will increase the demand for council tax benefit, for example. As more people become unemployed, many more rightly receive discounts on other services, such as leisure services. So unemployment increases demand at the same time as locking the authority into a cycle of falling revenue.
The theory behind the Bill is that local authorities can resolve that problem simply by expanding their business rate base and attracting more jobs. This was the theory that the Deputy Prime Minister set out when he explained the Government’s proposals to council leaders. He said:
“The new system will start on a level playing field—where you progress from there is up to you.”
It is a wonderful thing to be a Liberal Democrat. They can conduct politics exactly as if they are writing a “Focus” leaflet. But in the first place, there is no level playing field. We have debated endlessly what we see is the unfairness of the current local government financial settlement, which forms the basis for rate redistribution and penalises the poorest local authorities most. The simplest statistic is the most telling and it bears repeating. The 10% most deprived authorities lose four times as much as the 10% least deprived. The cumulative cuts in per capita spending hit the poorest hardest.
Bob Blackman
I am listening with interest to the hon. Lady’s explanation of the amendment. It suggests a whole series of different factors that the Government would have to take into account in deciding how much money a local authority would be given. Who would conduct that assessment? Would it be the Government, some independent body, the Opposition or the whole House? Otherwise, the amendment would simply put into the Secretary of State’s hands the power that she is accusing him of taking already in the Bill.
Helen Jones
The hon. Gentleman makes an interesting point, as an independent assessment would be a good idea. However, assessments of local authority need are already done by the Department for Communities and Local Government, so I see no reason why they should not be done in future. As he will hear when I move on in my speech, we have tabled further amendments requiring the report to be laid before the House so that it can be debated.
Amendments 37 and 38 would require the Secretary of State not only to announce central and local shares for each authority for a year, but to give indicative totals for the following year after consultation with local government. Despite the Government’s rhetoric, the Bill is a hugely centralising measure, as the Opposition have said several times. We are seeking to mitigate that by inserting a requirement that the Secretary of State consult local government before making his decision, which seems fair and proportionate and reflects the fact that what we are engaged in is a partnership between central and local government.
Amendment 37 would require the Secretary of State to give an indicative announcement for the subsequent two years to allow local councils to plan their services and make the right preparations, rather than working from year to year. Recently, all parties seemed to have accepted that it is much more sensible for local government finance announcements to cover a number of years. The previous Government introduced three-year settlements, and even this Government announced a two-year settlement, knowing that they expected to change the system.
Amendments 37 and 38 simply attempt to introduce a little more certainty into a very uncertain system. They would not change the power of the Secretary of State to decide the shares and they seek only indicative shares, not shares set in stone. In our view, that would produce better governance in local authorities and help them to plan. As it is, the Secretary of State can change the shares from year to year with little warning for local authorities. As we require local authorities to deliver statutory services, as has been said, we ought to allow them to plan the support that their community needs. Local authorities are constantly lectured by Ministers about the need to manage their resources, yet how can they manage their resources properly without any indication of how their finances will change from year to year?
Amendment 36 is merely a probing amendment. It is designed to tease out an explanation for the wording in the Bill. The Government intend to determine the baseline for non-domestic rate income in an authority by using the total that would be payable if it had “acted diligently”. We would like clarification from the Minister of what is meant by that. We all accept that an authority has to have an efficient collection system and that it should pursue debtors vigorously. However, what happens if an area finds itself in difficulty and its businesses are struggling because of the Government’s policies? Many businesses are in that position now and are finding it difficult to pay their rates. Is an authority expected to pursue such businesses to the limit? Will a council be penalised if it offers more discretionary reliefs? We would like clarity on that. We would also like clarity on the position of councils generally in offering discretionary rate relief. For example, will a council be penalised if it offers rate relief to too many non-profit organisations? Will “too many” be defined somewhere by the Secretary of State? What will be the position on hardship relief, which is also discretionary? Will a council in a difficult situation that tries to help local businesses be penalised because its baseline is set much higher than its actual income?
If I move on to amendment 39, I might be able to answer the point made by the hon. Member for Harrow East (Bob Blackman). We believe that it is vital that the Secretary of State not only makes an assessment of need before setting the central and local shares for each authority, but publishes that assessment and lays it before the House. That would bring transparency and openness to the system. We want the debate on the local governance finance report in the House to be informed by information on the level of funding for local authorities and the level of need within them.
There are, of course, variations in services because there are variations in circumstances. The main difficulty in dealing with local government finance is the belief held by many people that they should get roughly the same from certain services wherever they are because, as they see it, they are taxpayers and ratepayers. Elderly people who need care in their own homes have a reasonable expectation that they will get a certain standard of care wherever they live. If anybody was told that they could not have that standard of care because businesses had not grown enough in their area, we would soon hear from them. It cannot be right for looked-after children in Middlesbrough to receive a different standard of care from children in another authority.
By requiring the Secretary of State to prepare and publish a report, the House would be able to take account of the needs of groups that are not the most vocal, especially children and the elderly. Those groups do not always have access to journalists to argue their case. When they are written about, it is sometimes as if they are a different species. Many such people do not come to our surgeries or write to the local newspaper. After all, a society is judged not by how it treats its most affluent people but by the way in which it treats those most in need and those without a voice. We tabled amendment 39 to ensure that those matters are debated, and we hope that the Government will accept it.