Local Government Finance Bill

Jackie Doyle-Price Excerpts

Tuesday 10th January 2012 Commons Chamber

[Jackie Doyle-Price (Thurrock) (Con)]

I would like to give an enthusiastic welcome to the provisions in the Bill, unlike the previous speaker, the hon. Member for North Durham (Mr Jones). It is surely right to expect local authorities to support and nurture the business interests of their localities. I believe strongly that the provisions of the Bill will act as a powerful incentive to local authorities to consider what they can do to facilitate business and economic growth. It is also clear that, if localism is to have any meaning, we must re-establish the link between local authorities and their local business communities.

It is my view that the Bill will also make local government finance fairer, and I would like to illustrate that point with reference to my own local authority. The hon. Member for North Durham might be interested to note that my local authority is Labour-run, which might help to scotch the myth that it is only rich Tory boroughs that will benefit from the measures. Thurrock is a net contributor to the national pot, as we have a strong non-domestic rate base. At present, Thurrock collects some £98 million, but retains only £52.2 million.

That is not to say that Thurrock is a rich locality, however. As a borough, it does not score highly on indices of affluence; indeed, we have a number of communities that score highly on indices of social deprivation. The ward of West Thurrock and South Stifford has some communities that are in the lowest 10%, for example, yet it generates some £64.2 million in non-domestic rate income, which is more than is retained by the whole borough of Thurrock. That ward is clearly making a significant net contribution to the Exchequer through all kinds of taxes. It is therefore fair and appropriate that some of those companies’ business rates should be retained for use in the local community, and I am pleased that the community will benefit from the growth in that area in the future.

We should note, however, that there are consequences for a local area that enjoys a vibrant business community. In Thurrock, for example, high volumes of heavy goods vehicle traffic and road congestion cause a nuisance for residents. If we expect local authorities to take a more balanced approach to leading and managing the interests of the whole of their localities, they must have a stake in the economic success of that locality. Without it, there is simply no incentive to think beyond short-term electoral advantage.

I am quite clear that the current system does not encourage local authorities to take a balanced view. It actively encourages local authorities to ignore the needs of the local business community. After all, they have no votes. At best, local authorities take local business for granted. At worst, they view it as an inconvenience. I have certainly received representations from the business community in my constituency to the effect that the local authority does not understand their needs and is unsympathetic to them. Businesses may not have votes, but their needs are important if we are to build strong and successful communities and a successful economy. This Bill will encourage local authorities to be more responsive to the business needs of their communities and, in so doing, they will promote growth and jobs—and who can argue with that?

The Bill proposes that the Government should be able to retain some of the funding where local authorities benefit from disproportionate growth. I am quite interested to hear more detail about this. As I have said, Thurrock is already a substantial net contributor in respect of business rates. That contribution looks set to increase. We have massive inward investments by Dubai Ports; the port of Tilbury is expanding after an already successful 125 years; and, of course, the Lakeside shopping centre is building on its existing success. I am therefore interested in how the Government intend to operate the levy when a local authority receives a disproportionate increase in revenue, and in how to make sure that this is handled fairly. In particular, I remind Ministers that in supporting business growth, there are consequences for the locality. If we are to encourage local authorities to use tax increment financing and borrowing against their future returns, they need to be clear about just how much they will get from the expansion.

In finalising the provisions for the levy, I hope that Ministers will bear in mind the strong principle that local authorities must receive a significant stake in return for encouraging additional investment. Ultimately, we need to make it easier for contributing authorities to contribute even more to the Exchequer through business growth and, as my right hon. Friend the Secretary of State said in his opening remarks, to make the pot of non-domestic rates even bigger.