Local Government Finance Bill
Debate between Helen Jones and Robert Neill
Helen Jones (Warrington North) (Lab)
As the Minister said, many of the amendments in this group are technical. I do not wish to take up too much time on them—[Interruption.] That is the Minister’s job, not mine. If his Whips want him to talk for longer, that is his problem. There are a number of issues I want to raise in relation to one or two amendments.
We do not have a problem with Lords amendment 1 or the subsequent amendments dealing with discretionary rate relief in enterprise zones, or with Lords amendment 2, which implements a recommendation by the Delegated Powers and Regulatory Reform Committee. We support that, as we did in the other place.
The group of amendments beginning with Lords amendment 19, however, which deals with administration of the rate-retention system, raises a couple of questions on which I would appreciate clarification from the Minister. Billing authorities are being required to estimate their income before the start of the financial year. That estimate will determine the amount to be paid to Government as a central share and the amount to be paid to precepting authorities, to be transferred to their own funds. There are a number of amendments consequent on that change. If amounts are different, I understand that they will appear as surpluses or deficits on the authority’s collection fund. However, will the Minister clarify what would happen where a firm paying a major proportion of the authority’s business rates closed down mid-year—an example we have raised throughout the Bill’s progress? Surely that would lead to a deficit in the collection fund, so what would the local authority’s position be? Can a collection fund be run at a deficit, or would the shortfall have to be made up from reserves? I should make it clear that I am talking about a really catastrophic event, such as a firm that pays maybe 20% or 30% of the business rates in an area closing down, as happened with Alcan in Northumberland, for example.
As the Minister said, Lords amendments 34 to 38 deal with the arrangements for assurance. It is rather typical of the muddled way in which the Government go about things that they are having to make arrangements to take effect subsequent to the abolition of the Audit Commission before they have actually abolished it—so far they have only a draft Bill. The amendments ensure that the Secretary of State will define the assurance requirements though directions and produce certification instructions—I am sure he will work on them personally over the Christmas holiday. The amendments show the mess that the Government have got themselves into. They have no legislation ready to abolish the Audit Commission, yet they are having to put in place provisions in this Bill. The Government have ended up giving yet more power to the Secretary of State, in what was supposed to be a Bill to give more power to local authorities.
I would be grateful if the Minister clarified those points before we move on to the next group of amendments.
Robert Neill (Bromley and Chislehurst) (Con)
I welcome the stance that my hon. Friend the Minister has taken with this Bill. It is sensible to adopt the Lords amendments that he has outlined, and I am glad to see them. When I was responsible for the Bill in my previous role, they seemed to me to offer useful clarification and to strengthen the Bill.
I am particularly pleased that my hon. Friend referred to pooling. It is important that we encourage local authorities to explore to the maximum the opportunities that pooling makes available. The reason for that—the reason I think the Lords amendments are helpful—is that as the economy picks up, as it will, development opportunities will in many cases enhance the interdependency of neighbouring authorities. My London borough of Bromley is a good example. Many people in Bromley work in central London, but they are effectively part of the same economic area. The borough council pays for the services it gives people as residents, who contribute to the London economy through their work in the west end, the City of London or elsewhere, including, in some cases, across London borough boundaries—they may work in Croydon or somewhere such as that.
There is therefore great merit in giving local authorities not only the maximum flexibility to pool, but the maximum encouragement to do so, because one would not want a council to approve a substantial development on its boundaries that might bring it all the financial benefits, but which needed planning support from neighbouring authorities under the duty to co-operate and their good will because of where the work force come from. Pooling is important, and the Lords amendments give us sensible flexibilities.
Importantly, pooling fits with some of the other parts of the Government’s localism agenda. One of the arguments made earlier—I noted it in their lordships’ discussion—was about enabling local authorities to have adequate critical mass with their retained business rates, which they can use for tax increment financing, for example. The Bill has been important in taking steps forward on that. A pool will have a greater critical mass of funding, which can be used to approach the markets and enables greater leverage.
Helen Jones
My right hon. Friend is right. The reduction in the money available for council tax benefit is not the only thing that we are dealing with. The very same councils will be hit by the Government scheme for business rate localisation before being hit again by the reduction in the amount available for council tax. The Government call it a 10% cut, but in fact it is much more than that, because their calculations are based on what they think the cost of council tax benefit payments will be next year. It is no surprise to hon. Members who have followed the Bill’s passage through Parliament to learn that the Government believe that the cost will go down. In fact, the number of claims is rising as more people face reduced hours of work or unemployment. The Government have produced a wonderful document, which could have been written by Pollyanna, stating that claims will go down because the number of people on jobseeker’s allowance will go down and pensioner take-up will decline and so on. That is nonsense.
Robert Neill
The hon. Lady is very good at rubbishing proposals for reform, but will she accept her and her party’s responsibility for getting into a situation whereby spending on council tax benefit doubled on their watch? Given that they are so good at criticising everybody else, what would they do to reform the situation and actually help councils get people back into work?
Helen Jones
I say to the hon. Gentleman that the one thing we would not do is target the poorest and most vulnerable for cuts at the same time as giving a tax cut to millionaires. The Government’s priorities are entirely wrong.
Helen Jones
First, we would not give millionaires a tax cut. We would introduce the measures that the shadow Chancellor has set out, which would raise money to invest in infrastructure. The hon. Gentleman also has to bear in mind the contradiction in the Government’s policy. They want councils to grow their local economies, but at the same time they are taking a massive amount of money out of the most deprived local economies—money that would otherwise be spent in shops and businesses.
Helen Jones
May I make a little progress? I have given way quite a lot.
We need to think clearly about who the people affected are and what the Government think of them.
I have been reading the Minister’s blog; it is very entertaining and I recommend it to my hon. Friends as it is a treasure trove of Tory doublethink. The Minister begins by repeating the usual mantra that if someone is not in work, it is their own fault. He states that too many people
“expect to be able to rely on benefits and those who are hard at work are starting to get the hump.”
Let me say to him that 1,540 people in Great Yarmouth might start to get the hump with him because they are employed and in receipt of council tax benefit.
There are others. Will the Minister tell his disabled constituents, the vast majority of whom would like nothing better than to have a job, why they face an increase in their council tax? The Government trumpet their council tax freeze while imposing council tax rises on the poorest people in the country. When the Minister next visits a group of carers in his constituency—people who do daily the things that most of us could not imagine doing, and who save the country millions of pounds every year—will he say why their reward is an increase in council tax?
Elsewhere on his blog, the Minister writes that
“the sign of a compassionate country and a modern democracy is how it caters for those who are most vulnerable.”
That is what I mean by doublethink, which I think Orwell defined as the ability to hold two contradictory ideas at the same time, while believing in both of them.
Helen Jones
My hon. Friend is entirely right. I already find in my constituency that the organisations to which I used to refer people for help—as, I am sure, did many of my hon. Friends—are so overburdened, or in some cases have closed down, that help is simply not there. This is a very short-term policy that is causing financial instability for local councils and is an attack on the living standards of the most vulnerable people. The least the Government can do is hold a review in three years’ time.
It may be that the Government still believe that the system will work—although that is increasingly looking unlikely—but I think they are beginning to get cold feet. They know what these reforms will do in their constituencies and local authorities, and that they will be unworkable. By the time we get to the review, it is likely that the Ministers who introduced these measures will have moved on. The poorest and most vulnerable people, however, will still be paying the price. I hope that the Minister will at least accept a review, because by the time it takes place, it will be obvious what a miserable, vindictive and failed scheme this is.
Robert Neill
That was a vintage performance from the hon. Lady, full of high-blown rhetoric, plenty of sneering, sarcasm and knocking copy, and devoid of a single element of constructive analysis. It was devoid of any sense of constructive alternative, and recognition of the reality of the economic mess for which her party was responsible. It was devoid of any sense of shame. The greatest shame in the House lies on the Labour party. The greatest threat to the living standards of the most vulnerable—
Robert Neill
I will give way to the hon. Lady as often as she gave way to me—once.
Helen Jones
The hon. Gentleman is getting very worked up again, but may I remind him that, when his Government took office, the economy was growing and unemployment was falling? If he calls that a failure, what does he call the longest double-dip recession since the war?
Robert Neill
I call the greatest deficit in our peacetime history a failure. The benefits system that Labour created was so confusing and complex—it has some 32 different benefits in it—that it is virtually impossible for anyone to navigate it. I call that a failure. I call the fact that spending on council tax benefit doubled over the 13 years of the Labour Government a failure, because they did not achieve what should have been the objective of aiding people back into work. Some of my constituents have not known the opportunity of work for three generations. I call that a failure. The suggestion that the Labour party did anything other than fail is a bogus one. No amount of rhetoric and high-flown words can hide that reality.
We have not heard from Labour Members what they would do about the problem. They have made not a single constructive suggestion.
Local Government Finance Bill
Debate between Helen Jones and Robert Neill
Robert Neill
If the right hon. Gentleman deigns to read the statements of intent, he will find what is effectively an executive summary of the regulations, which will deal with how the default scheme operates, including for pensioners, who we have indicated should be protected. We are having regular meetings with our local government working group, which includes representatives of local authority treasurers, and we are also in regular contact with the principal software provider and other service providers. We are therefore doing exactly what the right hon. Gentleman would want us to do, although I doubt whether it will satisfy him, because it is not him doing it.
We have announced £30 million of initial funding to help meet the costs of planning and analysing draft schemes for both billing and precepting authorities, so we are supporting local authorities. The statements of intent are, in fact, very detailed. We have also provided a free online calculator to help local authorities to analyse the potential impacts of their proposed schemes.
Robert Neill
I notice that the hon. Lady is in what some might uncharitably term “sneering mode” this evening. I think that says something about the attitude of Labour Members towards a reform that they know needs to be undertaken, but which they never had the courage to undertake, which rather undermines their argument.
We have also taken steps in the Bill to make things easier for local authorities—for example, by clarifying that billing authorities can consult with precepting authorities, produce a draft scheme and consult more widely, all before the Bill receives Royal Assent. It is a fair point to say that the time frame is challenging, but doing those sensible things in parallel makes the scheme perfectly capable of being delivered. That is an important practical step that we have taken. We are determined to put local authorities into the best possible position to develop and consult on their local schemes. I stress that local authorities have real choices about how they develop their schemes for working-age council tax payers, what protection they choose to offer and how they choose to fund that protection.
The reality is that, under the circumstances, “one size fits all” will not work. Different areas face different challenges, and they have to make different choices. That is localism. I hope the Opposition will reflect on the fact that if they talk about being in favour of localism, it ill behoves them to seek to obstruct a Bill that, together with the Localism Act 2011, presents local authorities with the most significant practical step towards localism that we have seen in many a long day. I hope that, rather than repeating the mantra that we have heard so far—a mantra on, frankly, rather narrow ideological grounds—the Opposition will use their influence with their representatives in local government to step up to the plate, help to design the schemes that we all need to have in place and drive forward what is a real opportunity for local government in the years ahead. I commend the Bill to the House.
Oral Answers to Questions
Debate between Helen Jones and Robert Neill
Robert Neill
I have made it clear that we intend to protect the most vulnerable, but, equally, the hon. Lady has to recognise that spending on council tax benefit more than doubled between 1997 and 2010. That needs to be reduced as part of the strategy to lower the deficit that we inherited, in order to get the country back on track. We intend to do that in a proportionate and measured fashion, to protect the most vulnerable.
Helen Jones (Warrington North) (Lab)
Is the Minister prepared to apologise to the more than 10,000 people in the local authority area of my hon. Friend the Member for Stretford and Urmston (Kate Green), many of whom are families with children, whose council tax will rise as a direct result of his policy? Given that families in Stretford and Urmston will, like other families, lose an average of £580 a year as a result of changes to be introduced in April, and that, scandalously, 930 adults in that constituency alone risk losing all their tax credits if they cannot find extra hours of work, is it not about time the Government abandoned this tax increase for the poorest families, instead of obsessing about cutting tax for those on more than £150,000 a year?
Robert Neill
The apology should come from those who created the record deficit in the first place. The hon. Lady might also like to apologise for the inconsistency in standing at the last general election on a manifesto that promised to cut housing benefit when she says nothing now about how she would make reductions and nothing about how one can reform housing benefit without reforming council tax benefit, which goes hand in hand with it.
Local Government Finance Bill
Debate between Helen Jones and Robert Neill(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Syms
I fully support the Government amendments, because what they propose is sensible when we are moving towards a new system. We are talking about some very large figures, and it takes only a small change in one figure to throw the others out. It is important that local authority finance officers have a clear idea of where they are going with this new system. If there is a recalculation, which we do not expect, will it be perfectly obvious in the information supplied to local authorities? Local authorities will have to set a legal budget, and they will do so based on figures supplied by the Government. If those figures change a little, will the system be sufficiently transparent for local authority treasurers to understand where there has been some adjustment? Otherwise, if it is totally out of the blue and they cannot see the rationale, that will cause more problems than we are solving.
Robert Neill
I take my hon. Friend’s sensible point. That is why it will be done, if it is needed, by making a report to the House so that there is proper scrutiny. Local authorities would of course be notified and the basis of any change set out. We would also seek to give any local authority affected appropriate warning informally and through the formal channels here, and there would of course be scope for Members who represent constituencies affected to raise the matter in the House and with Ministers.
I am grateful that the hon. Member for Warrington North (Helen Jones) deigns to support the amendments but sorry that, in doing so, she has managed to raise churlishness to a new art form, even by her standards. I simply point out that I can scarcely remember a Government Bill in the previous Parliament that did not come with dozens of drafting amendments as it progressed. These things happen, as she knows full well. I am a little surprised and she does herself an injustice by making so needless a point.
Amendment 3 agreed to.
Amendments made: 4, page 16, line 40, at end insert—
‘(8A) Where the original calculations did not show that the Secretary of State was to make a payment to a relevant authority, but the revised calculations show that the Secretary of State is to make a payment to the authority—
(a) the Secretary of State must make that payment to the authority, and
(b) the Secretary of State must make a payment to the authority of an amount equal to the amount of the payment shown by the original calculations as falling to be made by the authority to the Secretary of State.’.
Amendment 5, page 17, line 10, after ‘(6)’ insert ‘or (6A)’.
Amendment 6, page 17, line 18, after ‘(8)’ insert ‘or (8A)’.
Amendment 7, page 19, line 8, at end insert—
‘(4A) Where the relevant previous calculations did not show that a relevant authority was to make a payment to the Secretary of State, but the revised calculations show that the authority is to make a payment to the Secretary of State—
(a) the authority must make that payment to the Secretary of State, and
(b) the authority must make a payment to the Secretary of State of an amount equal to the amount of the payment shown by the relevant previous calculations as falling to be made by the Secretary of State to the authority.’.
Amendment 8, page 19, line 19, at end insert—
‘(6A) Where the relevant previous calculations did not show that the Secretary of State was to make a payment to a relevant authority, but the revised calculations show that the Secretary of State is to make a payment to the authority—
(a) the Secretary of State must make that payment to the authority, and
(b) the Secretary of State must make a payment to the authority of an amount equal to the amount of the payment shown by the relevant previous calculations as falling to be made by the authority to the Secretary of State.’.—(Robert Neill.)
Helen Jones
I beg to move amendment 27, page 21, line 12, leave out ‘may’ and insert ‘must’.
Robert Neill
This has been an interesting and useful debate. The right hon. Member for Knowsley (Mr Howarth) and I did a crash course in regression analysis at probably about the same time, when we were performing similar roles in local government, and I sympathise with him. He is quite right: the analogy with the Schleswig-Holstein question is frequently raised, sometimes with some justice, as I think pretty much everyone in the Chamber knows. I can happily inform him that I am not aware of any former local government Minister being driven mad as a consequence. It has sometimes been suggested that some former Ministers have been driven to tear their hair out, although I am perhaps not the best person in the Chamber to comment on that either.
This issue has certainly exercised a number of right hon. and hon. Members in a most constructive way. It has also caused a number of us to be engaged in quite a lot of detailed debate, because, by its nature, whatever system we use—the existing system, the previous system, when we had relative needs assessments, standard spending assessments and so on, or the future system—there will always be quite a lot of technical detail. A lot of the detail will inevitably be in regulations of one kind or another.
Let me try to reassure hon. Members on a number of points. The provisions in the Bill set out the scope for regulations to be made. I say to the hon. Member for Warrington North (Helen Jones) that the phrasing of her amendment 27 would create a duty to have regulations, rather than a permission. I hope she will not pursue that point at this stage, because I cannot conceive—it is certainly not my intention—of the Secretary of State proceeding other than by way of laying regulations. It would be inappropriate to fetter the Secretary of State’s discretion. I can assure her that our intention is that regulations will be laid in the ordinary course of the scheme’s operations.
Secondly, let me assure hon. Members that we intend to consult local government and other interested parties on the regulations in a timely fashion. The hon. Member for Warrington North knows from her experience in local government that, at present, the Secretary of State lays the finance report and there is a provisional settlement and scope for representations. I hope I can reassure hon. Members that it is certainly our intention that the system will include the ability to make representations. It is by no means unusual for regulations to be introduced during a Bill’s passage through Parliament. I think that that happened during every local government Bill with which I was involved in the previous Parliament. Of course there will be consultation on the drawing up of the regulations to set up the scheme, as well as an opportunity for representations to be made during the course of the Bill.
Helen Jones
I am grateful to the Minister for clarifying the Government’s intention to proceed via regulation, but it would be helpful if he explained exactly why he thinks it would be wrong to fetter the Secretary of State’s discretion, because that leads us to think that the Secretary of State might want to proceed in another way. Will he assure us that that is not the case?
Robert Neill
It is certainly not our intention that that would be the case in the ordinary course of events. I think that the hon. Lady is unduly suspicious, perhaps as a result of her spending a long time in the Government Whips Office during the previous Parliament; I can understand how that could happen. It is conceivable that certain urgent circumstances might arise in which we might wish to proceed differently, but it is not our intention to set out these measures in anything other than a transparent process. I want to assure hon. Members of our good faith in that regard.
I also want to make it clear that amendments 27 and 40 are unnecessary and would narrow the options available to the Secretary of State in drafting regulations about the calculation of levy payments. We believe that it is right and proper that the measures should be set out in regulation rather than in the Bill, and I restate my assurance that we will work with local government on the content of the Bill. Any regulations will be subject to the affirmative resolution procedure in the House, and therefore subject to maximum scrutiny. At this stage, however, I do not want to limit us before we consult local government on the design of the scheme. I think that that is reasonable.
Robert Neill
Inevitably, one would have to consider revisiting the levy. As it is reported annually, the objective gives us the chance to review the balance of the accounts to ensure that there is a sensible equilibrium. Let us hope that we do not reach such a situation, but my hon. Friend’s point is fair. There is provision for that flexibility.
Robert Neill
Perhaps I might make just a little more progress.
The whole point of our concern is the need to give an incentive at all times for local authorities. We therefore do not envisage ever reaching the circumstances in which the levy is of such a kind that over time it destroys the incentive. That is why there is the aspiration to have 10 years between the resets to allow the incentive to work through. We will consult local government and then place our basis before the House for scrutiny, and I assure hon. Members that this is not intended to choke off the incentive for any local authority to go for growth. Equally, I want to assure authorities that have concerns, such as Knowsley, that there will be a proper and viable safety net that can be kept in balance to give them the necessary protections.
On the point made by my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), the provisions in the schedule essentially mean that there will be a report annually. There will still be the annual financial report—that is why there will still be opportunities for representations to be made—and we will consult on the regulations well in advance of their coming into force in 2013-14. As far as possible, we intend to give at least the same degree of notice as local authorities currently have. As my hon. Friend will know, consultation usually starts around the summer and then there is the period when the provisional settlement is announced, generally in December and thereafter.
Helen Jones
The Minister is being generous in giving way. Will he answer the point I put to him earlier? If an authority loses a major employer before the determination of its rates baseline and it then somehow replaces that employer and its income goes up, will that be counted as a disproportionate gain?
Robert Neill
First, it will depend on whether it was in a top-up or tariff scenario. Secondly, precisely because we are looking at two things, the normal arrangement will be that the calculation and the report are made annually. However, in the detail of the regulations there is provision, which we may not need to use, to consider in-year payment if something were to create some catastrophic loss that could not be made up. I am sure the hon. Lady will concede that these are precisely the details that we ought to be talking to local authority professionals about—particularly how best to achieve what we want.
Robert Neill
With respect to the right hon. Gentleman, to answer the question in those terms would prejudge the whole point of the consultation. I shall not do that. Hon Members have probed and have, I think, received clear answers, so I hope they will withdraw the amendment. If not, I ask the Committee to vote against it.
Helen Jones
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Robert Neill
That just enables the sum to be carried over. The point is that it would remain in the same account. It could not be used for any other purpose. It could be carried forward for a year as part of a buffer, but as I have indicated, it could go out of the levy account only by way of a safety net payment or as a distribution of the remaining balance to local authorities. Either way, it would go back to local government. That is the key point that I am not sure has been grasped. I therefore hope that Members will not press amendment 33 to a Division.
Amendment 35 would require any payment in respect of the remaining balance to take place in the following year. There are some technical reasons why I do not believe it would work, including the need for any payment from central Government to local authorities to include the standard provisions about Treasury consent. I know that Opposition Members will remember that. It is a technical thing, but it has to be done.
I assure Members that in practice we would not want to hold back any distribution of the remaining balance once it had been agreed in the local government finance report. However, payment as described in the amendment might be difficult to achieve because of the timing of that report.
Helen Jones
If the Government do not intend to hold back payment, why have they included in the Bill provisions for the payment to be made at such times and in such instalments as the Secretary of State determines? Surely holding on to the money once they have determined to pay it out makes it a gain to the Treasury, however we look at it.
Robert Neill
It is equally useful to have those provisions to deal with in-year payments, and I have already indicated to the hon. Lady that we do not intend to hold back the money and make gains to the Treasury. One way or the other, the money will all ultimately go back to local government.
There are technical issues to consider about the timing of the report and Treasury consent, so I say to the hon. Lady that I am willing to consider whether anything more can be done to provide greater clarity on Report. I assure her that we do not intend to hang on to the money, but if there is a way in which we can make the provision work better technically, we can return to the matter on Report if she does not press the amendment now.
Question put, That the amendment be made.
Local Government Finance Bill
Debate between Helen Jones and Robert Neill(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
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.
Local Government Finance Bill
Debate between Helen Jones and Robert Neill(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Robert Neill
There has been little time, and I intend to make a few points, if I may.
Secondly, and particularly regrettably, there was the simplistic analysis and the misleading attempt in the debate to create a false north-south divide—particularly disgraceful, it might be thought, when one has only to look at the facts and observe that over the last five-year revaluation period, when the average business rate growth in England was 5%, the following authorities had business rate growth above the average, and therefore would have benefited more than average had our proposed system been in place: Doncaster, Durham, Greenwich, Hull, Liverpool, Manchester, North Tyneside, South Tyneside, Sunderland, Sefton, Stockton, Middlesbrough—[Interruption.] No, I am not prepared to take any lectures from Labour Members when they cannot get the facts right. I will give way once, briefly.
Helen Jones
Would the hon. Gentleman like to tell us how much was invested in those regions by the Labour Government to promote that growth—investment which has now been cut under his Government?
Robert Neill
That confirms my view that there is an illusion that the racking up of debt is somehow beneficial to this economy, and that is the reason why, I am afraid, in one aspect of the Bill, it is necessary for us to deal with the required deficit reduction in relation to council tax benefit—precisely because the only way in which we will get sustainable long-term growth in any parts of this country is by reducing the deficit that we inherited.
In tackling that important issue, the Bill seeks to meet the concerns of local government that the reform of the benefits system into universal benefit might have meant that there was no longer direct payment of those moneys to local authorities. Our Bill makes that point, but also gives local authorities the ability to design those savings in a way that reflects their needs and their priorities—which, as we all heard from the debate, vary from locality to locality. The unwillingness of Opposition Members to face that simple reality speaks volumes about the shoddiness of their analysis.
It is remarkable that, with one or two honourable exceptions, no attempt was made to pursue some of the important measures which have been put in place to safeguard the underpinning of the business rate retention system. Not only will there be a baseline to ensure that no local authority loses out at the start, but the system of tariffs and top-ups will be uprated according to the retail prices index so that the vast bulk of local authorities’ income will be protected, and at the same time, local authorities that are incentivised to encourage growth will always see some benefit coming through. Similarly, the hon. Lady referred to infrastructure, but she poured scorn upon the introduction of tax increment financing, which is exactly the means of unlocking some of that infrastructure—a model called for by all dispassionate observers, and for many years by Members of all parties, but consistently ignored by the Opposition. They seem to be stuck in—
Robert Neill
I have given way once and I shall not give way again. I am sure the hon. Lady will have plenty of opportunity to raise these matters when we debate the Bill in Committee on the Floor of the House. I find it amazing that the shadow Secretary of State complained about that. It says it all that the first comment that the shadow Secretary of State could make was a debating point that it was objectionable that we should take such business on the Floor of the House, where every Member can participate, since every one of their local authorities is affected by the proposal. That suggests that the Opposition had very few other arguments to deploy. It is a little like the consistent trotting out of the inaccuracy in the growth figures across the UK. When we are reduced to a sort of political re-run of “Z Cars”, we know we have won the argument because the Opposition have nothing else to put into the equation.
The reality is that for the first time the Government have taken steps to redress the balance in a system that is recognised across the world as not working. There is not an adequate linkage with local authorities. I believe there are local authorities of all parties that want to do the best by their community, but they lack the tools and the mechanisms to create that by encouraging growth in their areas. We are replacing a flawed system with one which gives them the scope for growth. I had hoped that Members in all parts of the House would applaud that. However, we get a degree of churlishness and carping, indicating that because the Opposition did not come up with the plan, they regard it as unworkable.
We will talk through the details of the Bill as we examine it in Committee, but it is worth noting that very many of the independent responses to the consultation favoured this reform. It is worth bearing in mind the fact that in 2008-09 the Communities and Local Government Committee said that relocalisation would give local government an additional tool to pursue local recession-proofing policies, and it is worth recognising that the new local government network, not normally associated with the coalition side of the House, said that it recognised the potential that the growth incentive presents to create new private sector jobs and prosperity.
Hon. Members ought to wake up to reality and recognise that what is being put forward is an important and valuable reform. I hoped that rather than voting against it, they would have endorsed it and worked with us to make sure that we have a lasting system of finance for the future.
Question put, That the Bill be now read a Second time.
Localism Bill
Debate between Helen Jones and Robert Neill
Helen Jones
I think that, as Ministers keep saying from the Front Bench, it is for local authorities to make decisions about their priorities—the hon. Gentleman cannot have it both ways.
Let me be clear that I believe that people have a right to know how their money is spent. My personal view is that pay at the top of local authorities has risen to an unsustainable level, but it has been following pay in the private sector. We ought to make it clear that more than 90% of those who earn more than £150,000 are in the private sector—not the public sector. It is very interesting that the Government do not say anything about that. Neither do they want to say very much about low pay in the public sector, because that does not fit the myths that they create.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
I am shocked at how little attention the hon. Lady has paid to our debates up to now. Does she not recognise that when the hon. Member for Birmingham, Erdington (Jack Dromey) raised this issue, we said at a very early stage that we were more than prepared to take that away and consider it? The tone of her contribution is markedly different from the very constructive manner of her colleagues in Committee. We kept our promise: we have reflected and delivered.
Helen Jones
If the Government believed that this issue was so important, they could have put it in the Bill to start with, but they did not because their focus was all on pay at the top of local authorities and not on the low pay that is endemic at the bottom.