Coalfield Communities
Jim McMahon Excerpts(2 weeks, 2 days ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I thank all Members for a really thoughtful debate. When Members speak about their constituencies in the way they have today, we get a sense of the pride of place. I congratulate my hon. Friend the Member for Newcastle-under-Lyme (Adam Jogee) on securing the debate, and I thank the Backbench Business Committee for agreeing to it. The level of interest in the debate, and the fact that two time limits on speeches have been introduced, speaks volumes.
I know from my own experience of growing up in and representing a constituency with a fierce and proud industrial past, built on the back of the coal that fired it, just how much pride and sense of belonging comes with that. They were jobs—of course they were—but they were more than that; they were about people and place. That identity has stayed with the generations that have come since.
Between 1985 and 1997, the closure of 150 collieries resulted in approximately 250,000 job losses. That was not just about employment; those closures meant the loss of the vital social facilities that the National Coal Board and the trade unions had provided for those communities. That is why the Government are taking concrete action to support coalfield communities and secure the future prosperity of former mining communities while honouring their remarkable heritage.
We really got a sense of that in the debate. My hon. Friends the Members for Blyth and Ashington (Ian Lavery), for Ossett and Denby Dale (Jade Botterill) and for Alloa and Grangemouth (Brian Leishman) spoke about community and solidarity, as well as about heritage. It is that sense of belonging that we need to respect. Quite often—I hear this strongly when I go around the country—people feel not just that Parliament is a million miles away, but that the next town is a million miles away. The isolation that people often feel economically, socially and politically is profound, and we must do far more to meet that challenge.
This Government’s defining mission is growth, and we are determined that our coalfield communities are central to it. That is why we are working in partnership to invest in and empower the nation’s coalfields, so that they can kick-start growth in their area and increase living standards for working people. We have already announced planning reforms, devolution, our plans to make work pay, and settlements to fix the foundations of local government. That will also help coalfields to build their future and realise their full potential.
Michael Wheeler
Does the Minister agree that economic growth is only meaningful if it takes everyone in every community with it and people in every town feel the benefits, including the towns that we have talked about today?
Jim McMahon
My hon. Friend makes a very good point. He is sat next to my hon. Friend the Member for Leigh and Atherton (Jo Platt); they are both Greater Manchester MPs, and we are all very proud of Greater Manchester. We all see the red dots on the skyline of Manchattan—as we call it, very proudly—and the booming city centre that is Manchester. However, the truth is that unless the social opportunities are there and people have the confidence and skills to compete in that new market that is emerging, it can feel a million miles away. That is really important, and we do see that.
A lot has been said about the mineworkers pension scheme. We recognise that for too long, our coalfield communities have been an afterthought, which is why this Government have reversed those historic injustices by transferring £1.5 billion to mineworkers pensions. Our manifesto also promised that the truth of Orgreave would come to light. The BCSSS was also mentioned, and I can say that the Minister for trade is taking that issue up with the urgency that Members have called for in this House. It was covered in a lot of detail by my hon. Friends the Members for Bassetlaw (Jo White), for Easington (Grahame Morris), for Amber Valley (Linsey Farnsworth), for Stafford (Leigh Ingham) and for Nuneaton (Jodie Gosling). They all spoke, seriously and rightly, about the urgency that is required to resolve this issue. This Government have heard that message loud and clear, and I know that Ministers in other places are working on that.
Grahame Morris
I am grateful for the Minister’s reassurance on the BCSSS. Before he moves off the issue of funding for growth, a number of hon. Members, including my hon. Friends the Members for Alloa and Grangemouth (Brian Leishman) and for Ayr, Carrick and Cumnock (Elaine Stewart), raised the issues of fair funding and the Coalfields Regeneration Trust’s model for community wealth building. It is seeking a relatively modest £500 million in capital investment spread over five years, which it believes could create half a million square feet of new industrial space. Is the Minister minded to look at that proposal favourably?
Jim McMahon
We are absolutely committed to ensuring that every part of the country realises its full potential. Let us be clear: everybody in every part of the country has potential, but far too often, that potential is not met by opportunity. We will look at any projects and measures that aim to do what my hon. Friend has described in the coalfields to ensure that potential is met, and I can certainly take up that point and maybe follow up in writing.
The proud history of our coalfield communities must be matched with a proud future. Late last year, we published the English devolution White Paper, and a Bill will follow. That White Paper includes a reformed vision for the long-term plan for towns, which the autumn Budget confirmed will be retained and reformed as part of our regeneration programme. We are proud that through that plan, coalfield communities from Newark-on-Trent to Wrexham will receive a package of up to £20 million in funding and support. Furthermore, this Government are working with mayors where they are to produce local growth plans across their city regions, which sit alongside local coalfield communities, because we recognise that those are vital to our collective economic future.
That regeneration, and the long-term investment and co-ordination that are needed, were referenced by my hon. Friends the Members for Whitehaven and Workington (Josh MacAlister), for Cannock Chase (Josh Newbury), for North Durham (Luke Akehurst), for Leigh and Atherton, for Ayr, Carrick and Cumnock (Elaine Stewart), for Chesterfield (Mr Perkins), for North Warwickshire and Bedworth (Rachel Taylor), for North West Leicestershire (Amanda Hack) and for Airdrie and Shotts (Kenneth Stevenson). They recognise that of course, we can be proud of the history of our place—we all are—but the future is important too, and if we do not put the building blocks in place to rebuild industry and pride, we will miss a trick.
As was referenced earlier, no working-class person is waiting for a handout, but we absolutely deserve a hand up. We are sick and tired of being told to wait our turn, to behave and stand in line and to know our place, hoping that somehow, tomorrow, our turn may just come. Lesson after lesson and generation after generation shows that, for all those promises, it never comes. We cannot have power, wealth and opportunity constantly being hoarded by the centre, to the exclusion of our communities that are impacted by it.
That is why devolution is so important. If we do not break away from the centralising model of command and control, and the hoarding of power and opportunity, we will never make progress with our economy, society or political power in this country. This week, we are proud to be expanding the devolution priority programme, through which more mayors will be created, with the powers and the tools that they will need, as local leaders, to do what is right for their area. They will not have to come cap in hand to central Government, in constant, wasteful bidding wars.
Like my hon. Friend the Member for North East Derbyshire (Louise Jones), I pay tribute to the late John Prescott, a working-class voice in politics. He took up that charge—that fight—and we all recognise the work that he did. Members of the House have our assurance that we stand with our coalfield communities and the excellent Members of Parliament who have spoken today.
Question put and agreed to.
Resolved,
That this House has considered Government support for coalfield communities.
Local Government Finance
Jim McMahon Excerpts(2 weeks, 3 days ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I beg to move,
That the Local Government Finance Report (England) 2025–26 (HC 623), which was laid before this House on 3 February, be approved.
Madam Deputy Speaker
With this it will be convenient to discuss the following motion on council tax increases:
That the Referendums Relating to Council Tax Increases (Principles) (England) Report 2025–26 (HC 624), which was laid before this House on 3 February, be approved.
Jim McMahon
The Deputy Prime Minister and I, like many others in this House, have local government in our blood—we are proud public servants. We know what a difference the sector makes every day to millions of people across this country, and how much stronger local government, working in genuine partnership with central Government, can achieve to change lives. I thank the millions of dedicated public servants who work in and for the sector for all their efforts to deliver more than 800 services that local people rely on.
We know it has been a difficult few years, but this statement is an important step towards rebuilding the foundations of local government, ready to meet the scale of the challenge ahead so that we can rebuild our country together as part of our plan for change. That is why I take the responsibility of leading the Government’s work to rebuild the sector with the seriousness and urgency that is, quite frankly, long overdue.
Today, I will set out funding for local authorities in England for the coming year through the final local government finance settlement. Before I do, I want to say that the Government are grateful to all those who contributed to the consultation on the provisional settlement, which attracted 227 responses, including more than 45 from Members of this House.
Sir John Hayes (South Holland and The Deepings) (Con)
I am extremely grateful to the Minister for giving way, and I appreciate much of what he has already said on the difficulties and challenges local government faces, and the Government’s recognition of that. Part of the consultation feedback he will have had is on the local authorities that have to fund drainage, such as South Holland, in my constituency, and many others. There is a real problem here, because drainage is not adequately funded through the system; it does require an extra grant, in my judgment, to those local authorities. Will he look at this issue, and will he meet me and others to discuss it further, should that be helpful?
Jim McMahon
I thank the right hon. Gentleman for his question, and assure him that it is an issue we are acutely aware of. The disproportionate burden that drainage places on small district councils is quite a challenge. We met representatives from a number of district councils to talk about the internal drainage board levy system, and, as an interim measure—in the end, I think we do need a more fundamental review of how it is paid for—we have increased the levy grant by £2 million to £5 million, so we are beginning to get there. However, I agree with the right hon. Gentleman entirely: we do need a long-term solution to that. He has my commitment that we will find a way through that as we begin the wider reforms later on.
As the Chancellor said last week, this plan will be achieved first and foremost through growth, which will be driven by empowered local leaders working in partnership with local communities and local businesses; those who have skin in the game are now on the playing field, not confined to the terraces as spectators. This new approach has to start with strong and empowered local government, because whether we are talking about raising living standards, delivering 1.5 million new homes and vital infrastructure, getting our NHS and social care system back on its feet or creating good jobs and strong communities, it all comes back to local councils delivering for local communities.
Indeed, we cannot deliver on the national renewal that working people deserve without grassroots government leading the charge, which means resetting our relationship with local leaders and rebuilding the foundations from scratch. It means ditching the slogans and gimmicks in favour of a determination to get the basics right, delivering decent local services that people can begin to rely on once more.
After 14 years of neglect and decline, that will be easier said than done, and, because of the scale of the challenge, it will take more than six months to fix. But be clear: we have changed course. The work has begun with determination and with pace. Councils of all political stripes are feeling the strain, and it will be a long, hard road to get them back to full fitness. This final settlement marks an important milestone on that journey, as we finally turn the page on chaos, austerity and 14 long years of managed decline.
In that spirit, the settlement addresses the financial crisis facing councils head on, moving away from bidding wars for wasteful competitive funding pots and towards core, stable multi-year financial settlements.
Rebecca Long Bailey (Salford) (Lab)
The statement is extremely welcome. In Salford, our core spending for 2025-26 will increase by 8.7%. That is above the national average, but it is still less than the 14% we have had to increase our adult social care budget by to meet higher costs. Does my hon. Friend agree that the Government must move quickly on multi-year settlements and up-to-date assessments of councils’ funding needs?
Jim McMahon
I thank my hon. Friend for that question and pay tribute to Salford for its leadership in the work it is doing in many areas of public sector reform in Salford and across Greater Manchester. In the end, if all we do is pay at the back end for a system that, frankly, is broken, we will be paying more and more every single year for a system that is delivering worse outcomes for service users. That is bad for service users and bad for taxpayers, so we must have a more fundamental response and we fully intend to do that.
The multi-year settlements are essential to ensure local leaders have the time and space to plan their budgets. But we will not stop there. We are introducing a fairer system to give councils the certainty and stability they need to go from costly crisis management to long-term prevention and the root-and-branch reform of local public services. Crucially, I can now confirm that core spending power for the sector will be more than £69 billion for 2025-26, a 6.8% cash terms increase on this year. I can confirm that, despite some very difficult choices—there have been choices and trade-offs to make, as there always are—this settlement will mean that no local authority will see a reduction in its core spending power.
Mr Jonathan Brash (Hartlepool) (Lab)
I welcome the settlement, which sees a reversal of the past 14 years for Hartlepool, where cumulatively we lost £235 million in a decade. This year, additional grant funding is going up by £10 million, which is hugely welcome. However, there remains the problem of the council tax system itself. In Hartlepool, if you are in a band H property you pay more than £3,000 more than you do if you are here in Westminster. Surely the Minister can agree with me that that is inherently unfair? Will he engage with me and the all-party parliamentary group on council tax reform, which I lead, to bring fairness to towns such as Hartlepool?
Jim McMahon
There are, understandably, many criticisms of council tax. It is accepted that it is a fairly regressive tax in terms of the relationship between the ability of a household to pay versus a property’s value, but in the end it is a reliable tax that is understood by the taxpaying public. The framework of council tax will be maintained, in the same way as business rates, but that does not mean that we cannot do more to make it fairer. The best way to make it fairer in this settlement is for the Government to play their part. What we have seen over the past 14 years is that, despite an acceleration in council tax increases, councils have still found themselves impoverished: they cannot raise enough money locally, whatever they do, to fund the demand for local public services. We clearly see the role of the Government as an equaliser to the system. Taking into account the ability to raise tax at a local level, by providing a top-up the Government can ensure that every area gets decent local public services, and we can begin to get some fairness into the system. I take my hon. Friend’s point entirely, however, and I look forward to the work of the all-party parliamentary group.
Luke Taylor (Sutton and Cheam) (LD)
I echo the call for a replacement for the council tax system. We on the Liberal Democrat Benches have called for that for years. Please will the Minister and the Government consider bringing forward plans that retain the power for local councils to decide levels of taxation, but make it a much more progressive model of taxation?
Jim McMahon
I cannot commit to that today. What I can do is to commit, from a political point of view, that the Government are willing to work cross-party and through APPGs to understand the weight of the issue and the potential solutions. I will be honest, though: we need to manage expectations on whether we can get consensus in this place on a new form of council tax or local property tax, but that does not mean we are not willing to listen to arguments.
Steve Barclay (North East Cambridgeshire) (Con)
We saw one area of consensus when the Minister responded to the point made by my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) about internal drainage boards, and I welcome his recognition of the problem in areas such as Fenland in the Cambridgeshire fens. That was a pertinent point, and I thank him for his comments.
Will the Minister take this opportunity to tell us whether any council will be worse off when this settlement is netted against the additional costs of employer national insurance contributions and those of their suppliers? According to reports that we have been given, a number of councils will be worse off. Can he rule that out?
Jim McMahon
The £515 million of investment from the Treasury to help councils with the increase in employer national insurance contributions has been distributed on the basis of their net service expenditure costs. We thought that that was the fairest way of establishing an evidence base that could be scrutinised. There have been legitimate representations about third-party provider costs in some critical areas, such as social care. We accept the figures from the Local Government Association because we have no reason to dispute them, but our difficulty is that that in itself does not mean that the cost will be passed on directly to the local authority in question. Some parties are bound by contracts that mean that they cannot pass it on even if they wanted to. There will be negotiations about the ability of a provider to absorb that cost, but we do not underestimate the problem. No one is going to pretend that this settlement fixes the system. What we want to try to do is stabilise the system through a multi-year settlement with bigger reforms.
Steve Barclay
I commend the Minister for the constructive way in which he addressed my question, but I think it important to be clear. He seems to be saying that as a result of this settlement, a number of councils will be worse off. We understand the context, but I think he has just confirmed expressly that councils will be worse off as a result of the tax rises that the Chancellor has imposed and which this settlement does not fully meet.
Jim McMahon
I think that that is true up to a point, but we need to take a couple of factors into account. First, the payment relating to employer national insurance contributions goes straight to the council. Secondly, this needs to be taken in the round. For the right hon. Gentleman’s own council, the social care grant is £48 million, the social care change grant is £6.7 million, and when it comes to third-party providers, the market sustainability and improvement fund is £10 million. We are trying to meet the demand in a very complex environment, but, as I have said, there is no pretending that this will fix a broken system in one fell swoop. The reform will take time.
Mr Clive Betts (Sheffield South East) (Lab)
My hon. Friend has done an excellent job on behalf of local government with this settlement, in very difficult circumstances, and I think the sector recognises that. However, I have one caveat. In response to the questions about council tax, he said that there would not be unanimity, but I think there will be a great deal of consensus that if the former Secretary of State, Michael Gove, thinks the system is regressive, it is probably very regressive. I hope my hon. Friend is keeping his mind open—I think he did leave the door a little ajar—about the fact that at some point we will have to have a review of a system that is based on valuations that are more than 30 years old. This is simply not sustainable for the long term.
Jim McMahon
I take my hon. Friend’s points entirely. I credit him for much of the work that was done when he chaired the Select Committee, which he did for a long time, and I attribute to his intervention the credibility that it is due. We are focusing today on our immediate fiscal response to support councils over the current financial year, but we accept that to bring about long-term structural reform, such matters as addressing a council’s ability to raise local tax through business rates and council tax must be taken into account, alongside, of course, the cost of delivering public services, including the cost of rural service delivery. We are absolutely committed to taking all those factors into account.
Jim McMahon
I am going to make a bit of progress. I am mindful of time, and I believe we are guillotined at 7 pm.
The Budget will deliver more than £5 billion of new funding for local services over and above council tax income. There are no slogans and no gimmicks. This is real action—£5 billion-worth of real action—and I can confirm that £20 million more will be made available for the children’s social care prevention grant, putting prevention and reform at the heart of the recovery. After hearing representations from the councils affected, we can also announce an additional £2 million of support for councils with internal drainage board levy pressures. That is on top of what was announced in December’s provisional settlement, so the grant is now worth £5 million in total.
We will set aside almost £60 million for the coming financial year to ensure that local leaders have the vital capacity to get their financial house in order, so that councils can be effectively supported to better understand their spending and, equally, so that they can be held to account for it by their electorate, which is a vital part of the democratic process. The funding that we are providing includes £515 million to help local government with the increase in employer national insurance contributions.
Wendy Morton
My understanding is that employer national insurance contributions are not being fully funded by the Government. I would be delighted to hear that I am wrong, because that is really worrying me, having spoken to my local council. On that basis, does the Minister not accept that by imposing this extra burden on local authorities, ultimately it is working people who will be affected? There will be fewer public services, less money going into social care, and pressure on council tax.
Jim McMahon
This is not a perfect settlement, but it is my honest belief that it is a good settlement. We are keen to make sure that the money goes to local authorities in a way that is transparent, with an evidence base that can be scrutinised. Councils are sick and tired of the system being manipulated by Governments of different types over different periods in a way that is not fair.
Jim McMahon
I will make some progress, but to answer the right hon. Lady’s question on employer national insurance contributions directly, the funding is based on service expenditure costs. The reason is that that allows councils to make a decision about whether the money will cover in-house provision, or whether they will have contractual pressures further along in the system that show up in their service expenditure budgets. That is the approach that we have taken, and the Institute for Fiscal Studies has come out and said that it is a fair way of doing things. As I say, there is no perfect way to deal with this issue in the time that we have, but we have arrived at a good way to do it that gets the money out of the door to the places that need it.
Matt Rodda (Reading Central) (Lab)
Will the Minister give way on that point?
Matt Rodda
I commend the Minister’s approach, because it is excellent that we have certainty. The Government are supporting local councils to make wise budgeting decisions and to invest in all the crucial things that we all want to see in our communities, including more help for vulnerable people, the important work on children, and infrastructure improvements such as new cycle lanes and better parks. Those are all valuable contributions to our communities, so I thank him for that.
Jim McMahon
That is the point. When it comes to fairness in the council tax system, we have to be honest and say that there has increasingly been an imbalance, whereby people are paying more and more but often receiving fewer and fewer universal neighbourhood services. There is a real danger to the democratic process if there is not a link between the tax that people are paying and the quality of public services that they are getting in return. In the end, councils are wrestling with adult social care, children’s services and temporary accommodation, and what else can they do but meet the demand? It is not a good position for the taxpayer or for local authorities, and we acknowledge that.
Our new £600 million recovery grant targets areas with both the greatest need and the greatest demand for services. The recovery grant is the first meaningful step towards long-overdue funding reform, but it is only the first step. A longer-term and more fundamental overhaul of the way that councils are funded is needed to ensure that all councils can deliver for local residents. The Tories committed to improving and updating the way that councils are funded through the fair funding review, but in the end they failed to take the tough decisions needed to deliver it, just like they failed to give councils certainty and security so that they could plan ahead, with a decade marked by year-by-year, hand-to-mouth settlements. That is why the 2026-27 settlement, which will be the first multi-year settlement in a decade, will introduce an up-to-date assessment of councils’ needs and resources.
We are acting where the previous Government failed. We will get on with the job of allocating funding fairly, based on the evidence of need, because councils know that every pound counts, and they also know that the current system—
Jim McMahon
I will make some progress, but I will take more interventions later.
Councils know that the current system is riddled with inefficiency and is poorly targeted at meeting need. It is vital that we get this right, and we want to hear from all parts of the sector to better understand the drivers of need, including deprivation, the ability to raise tax locally and the impact on service delivery in rural areas. The consultation on these reforms runs until 12 February, and we welcome representations from all who have a stake in this agenda. We are listening to the sector and, through this settlement, responding to the real drivers of cost, especially the spiralling demand in areas such as social care. Importantly, we are taking into account the ability of councils to raise funding locally.
Andrew Rosindell
What does the Minister say to residents of the London borough of Havering, who have had a very poor settlement over many decades under all Governments? We have one of the oldest populations in London and also one of the youngest populations in London, so the settlements never take into account the factors that I have outlined. Will he please look at the outer London boroughs? It seems to me that all the money goes to inner London, and we do not get very much in places such as Romford.
Jim McMahon
Where we can agree is that we accept that the old perspective that there are inner-London pressures that do not feature in the outer-London boroughs might have held in the past but it does not address the complexity that there is today, because a number of pressures have moved outwards into those outer boroughs. I think that that is accepted and appreciated. I said that this might not be a perfect settlement, but it is a good settlement. The hon. Gentleman’s council has a 6.5% increase in its core spending power. So there is room there—this is not a flat cash settlement—and we hope that the local authority will make the necessary decisions.
We are not interested in scoring party political points or pitting one council against another. We know that councils of all political stripes are struggling, and we want to work together, through the later reforms that we are looking at as part of the more structural review we are undertaking, to make sure that we genuinely address that. We hope that when Members across the House look at the rationale and the evidence base—whether they agree with the quantum is a separate issue—they can at least say that it holds. That is the work that we are undertaking today, and we encourage Members to contribute to the process.
Jas Athwal (Ilford South) (Lab)
On the point about inner and outer London, the problem is that outer-London boroughs are now seeing inner-London problems, the funding system is archaic and the formula is based on outdated deprivation statistics, using household numbers rather than population. This unfairly impacts boroughs such as Redbridge, which covers my constituency. It is home to many multi-generational families living under one roof—
Jim McMahon
In a way, there is commonality across the House in recognising that particular problems really ought to be taken into account when it comes to local government funding, and if it is got right—our intention is to get it right—it will take into account up-to-date population and deprivation statistics. It should take into account the ability of a local authority to raise tax locally through council tax, or through business rates or fees and charges. It should take into account the cost of delivering services, whether that is about the rental costs of acquiring a space to operate from or even the cost of delivering services in areas such as rural or coastal communities, where there are particular issues. The formula should take that into account, so let’s work through that.
We are responding to the pressures, which is why we are making £3.7 billion of extra funding available for social care authorities. That includes an uplift of £880 million in the social care grant, which includes an additional £20 million that I have confirmed today for the new children’s social care prevention grant, taking the total for that grant to £270 million. That paves the way for the national roll-out of transformed family help and child protection services. We have doubled settlement investment in preventive children’s social care to £500 million next year. If we do not reform the system and focus on prevention, we will continue to pay more and more, too often for worsening outcomes.
This is happening alongside the Education Secretary’s work to take forward the Children’s Wellbeing and Schools Bill, which will crack down on profiteering and improve child protection—something that the Tories failed to do, at a very dear cost to taxpayers, who were left to pick up the bill. Again, the severe pressures on SEND services came across loud and clear during the consultation. As we have announced, we are boosting SEND provision and alternative provision by an extra £1 billion to start to return the system to financial sustainability and to improve outcomes for young people. We are aware of the impact that dedicated schools grant deficits are having on council finances, which is why we are committed to working with councils, parents, teachers and schools to transform SEND provision and the life chances of the children who need it.
Ben Maguire (North Cornwall) (LD)
Cornwall council is now £1.3 billion in debt. What is the Minister’s plan to address future settlements, which will obviously be affected by very high interest rates on that enormous debt? The human cost is that the adult education centre in Camelford is now closing.
Jim McMahon
Very real pressures have built up, and I will not criticise any council from the Dispatch Box—the days of doing that have long gone. That is not to say that I agree with every decision made by individual councils, or that I would not have chosen a different course. In some cases, the decisions were plainly not in the interests of local taxpayers.
However, we are where we are, and we need to stabilise the sector this year and reform the funding system over the multi-year settlement, so that we begin to build back the foundation of sustainability and long-term security. We need to invest in prevention and reform, so that we get ahead of the problem instead of paying at the back end for worse outcomes. In the end, we need a funding system that really holds.
By doing that, we will ensure that most councils in most parts of the country find themselves in a much better position than they were before the work was undertaken. Because of the types of decisions that have been taken, there will always be outliers. Whatever system we design, we can accommodate most councils in most circumstances, but because of the decisions that have sometimes been taken, we cannot accommodate all councils in all circumstances. The Government have committed to working alongside councils to work through this. Of course, local government reorganisation will accelerate the need to do that in some areas, because we will have to reconcile the creation of unitaries with the inherited debt liabilities. We are fully sighted on that.
Natasha Irons (Croydon East) (Lab)
I thank the Minister for meeting me and other Croydon MPs to talk about our council’s legacy of debt.
The Minister talks about early help and prevention. Will the funding formula take account of things such as youth services, where early help and prevention can have a massive impact on what councils have to spend over a longer period?
Jim McMahon
Absolutely. Deprivation is a key part of the funding settlement. This is the first settlement in a long time, and probably the first since the area-based grant in 2010-11, in which deprivation is a measure by which the Government allocate money to the sector.
If we see this as only a local government problem, we will miss the prevention and reform agenda that we need. My hon. Friend and I often talk about this, but the Home Office is working on diversionary activities for young people. In many communities, gang activity, child criminal exploitation and knife crime are very real issues that draw too many young people into crime. We need those diversionary activities in the places where people live.
We need to address that, and it should be a whole of Government agenda. That is why we are marshalling our work around the Government’s missions, and our approach is anchored to the plan for change.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I welcome the focus on deprivation. The Minister says he does not want to criticise the leadership of particular councils, but will he praise the leadership of Middlesbrough council? Mayor Chris Cooke has led the council out of a best value notice and produced the first growth budget in years, with increases in area care and much else. Will the Minister commend that work?
Jim McMahon
That work is demonstrated by the Department being able to remove the best value notice. We know that Middlesbrough is not at the end of the improvement journey, and the council itself would say that, but the characteristics of strong civic leadership are clearly on display. I appreciate that it is a lot easier to praise a council from the Dispatch Box.
When we consider funding for councils to deliver vital services, we must also consider the taxpayer. We are committed to keeping taxes on working people as low as possible. At the same time, we understand the immense pressure that councils are under, which is why we will strike a balance in maintaining the previous Government’s policy of a 5% referendum principle threshold, which includes a 3% core principle and a 2% principle for the adult social care precept. We all know that councillors, mayors, police and crime commissioners and councils will take into account the impact of increases on households, and it is right that they do so. For the vast majority of councils, those principles and the additional £5 billion in funding that we have announced will be sufficient to support them in setting their budgets. However, we know that some councils are in difficult positions, as we have heard today. For some, unique local decisions have had an impact on their financial stability. For others, over a decade of mounting pressures has finally caught up with them, and whatever they do, that is the reality. We are determined to work together to find a way through that, including by considering requests for additional council tax flexibility and requests from councils seeking exceptional financial support.
Mr Lee Dillon (Newbury) (LD)
My own council, West Berkshire, a small unitary authority, now has only 2% of its net revenue budget in reserves, and has written to the Government seeking £16 million of exceptional financial support. I urge the Minister to stand with West Berkshire council and to grant that support, so it can continue to deliver those important services.
Jim McMahon
The hon. Gentleman has my commitment that we will review the submission that we have had in good faith and in the spirit of partnership. We recognise that the councils that have made exceptional financial support applications have done so at the end of a process, not at the start, and that they need the Government to work with them. We will confirm exact allocations later, local authority by local authority, but I take on board what the hon. Gentleman says.
The financial legacy left by the last Government has led to a record number of councils asking for additional council tax increases. The ability to request additional increases already existed, but there is a need to balance them with the impact on local taxpayers. On that basis, we have taken a stricter approach than the previous Government. That means avoiding excessively high increases and agreeing to rises only where councils have comparatively low levels of existing council tax.
Having carefully considered requests, we have agreed to modest increases in six local authorities: Windsor and Maidenhead, Birmingham, Bradford, Newham, Somerset and Trafford councils. However, our strict approach means that we have not been able to agree to all the requests that we have had and that not all requests have been met in full. Taxpayers in those areas are still expected to pay less than the average amount of council tax, compared with similar councils, because of the approach that we have taken. We have been clear that all councils should take whatever steps are necessary to protect their most vulnerable residents from the impact of additional increases.
At national level, even with those increases, the overall increase in council tax is not expected to exceed that of last year. Without the additional £5 billion provided in the Budget and the settlement, there is no doubt that that would not have been possible. In a way, that displays the new relationship, because, unlike the previous Government, we will not impoverish councils or parade them around to be shamed. Instead, we will work with them to put them back on their feet financially. We will fix the broken local audit system and the unacceptable backlog that we inherited; move from a failing, dispersed approach towards a focused, proportionate local audit office that offers value for money; and improve transparency, accountability and confidence in how hard-earned taxpayer money is being spent.
However, we all know that there is no quick fix. The legacy that we have been left is nothing short of scandalous, but this settlement marks a turning point. It will back local government with the long-term funding and certainty that it needs to fix the foundations, based on a new partnership with central Government. Through reform, fairer funding and better stewardship, we will ensure that the sector is fit, legal and decent, so it can stand on its feet as a strong, functioning arm of the state. The settlement will provide more money for local government, especially in areas of greatest need, such as social care, and more investment in the things that matter to local communities, from support for our high streets and town centres to mending potholes and boosting local planning departments, adding up to public services that we can all begin to rely on once again.
Stronger communities will support a stronger economy, with higher growth, delivering higher living standards for working people that will be felt in every part of the country. Driven by a devolution revolution, we will deliver the greatest transfer of power from Whitehall to our communities in a generation. Finally, we will put politics back into the service of working people. Our plan for change has local government at its heart and I commend it to the House.
Jim McMahon
Just to be clear, even rural councils will receive a near 6% increase in their core spending power. It is correct that £600 million through the recovery grant is targeted at deprived communities, but we have followed an assessment of need right through the system, including that of rural authorities. The hon. Member must welcome that.
Kevin Hollinrake
I will come on to that, but we do have a different perspective. The point that I am making principally right now is that there are rising costs on councils, both in direct costs through national insurance and through indirect costs, which are not fully covered by this settlement, and I think the Minister accepted that fact earlier in his remarks.
The reality is that rural areas will face higher council tax increases to make up for reduced central funding, despite the cost increases of providing services in rural areas. To give the House an easy example of this, my local authority, North Yorkshire council, spends more on school transport than it does on the whole of children’s social care. That is the cost of delivering services in rural areas. Despite that, the Labour Government have chosen to scrap the rural services delivery grant. They have said that they are repurposing it, but it is now clear that this has not been repurposed to support rural areas in the way that the delivery grant used to do, despite the higher cost of service delivery in those areas.
The chairman of the County Councils Network, Tim Oliver, has warned that rural areas will lose hundreds of millions of pounds due to Labour prioritising urban areas over rural ones in the way that it distributes funds. The Government are moving distribution away from a needs-based formula to one based on deprivation. He has warned that Labour’s funding formula will mean that rural councils would lose an estimated £190 million in a single year. He has also stated that, when taking into account the moneys needed to cover the costs of the national insurance increases, this is the worst settlement for county councils in four years.
Mr Forster
I was about to be nice to the Minister and the team before the hon. Member intervened, which is quite ironic.
I am very grateful that the Government have listened to the concerns of distressed councils, including mine. Unlike the previous Government, who imposed higher council tax rises and higher interest rates as a punishment for bankruptcy, this Government have listened, and I am grateful to the Minister for doing so. That has saved my council alone millions of pounds. What I found very surprising was the brass neck of the shadow Secretary of State, the hon. Member for Thirsk and Malton (Kevin Hollinrake), when he criticised this Government for their tax rises; the previous Government punished my council with a 10% council tax rise because it dared to go bankrupt as a result of Conservative decisions. I have urged the Minister to not impose the same level of council tax rises as the previous Government, and I hope he will not do so.
Thanks to the work of the Liberal Democrats who now run Woking council and the amazing council staff, Woking is turning a corner, but I really worry for its future and that of councils like them, and the District Councils’ Network worries as well. The Minister has highlighted that there is no reduction in any local authority’s funding this year, but the DCN says that 0.3% is the average cash increase in core spending power for boroughs and districts. That is not good enough. Those councils shape their areas—they protect homeless people—and a 0.3% increase in core spending power is just not acceptable.
Turning to county councils, the County Council Network says that four in 10 of its members say that they are in a worse position than before the autumn Budget and the financial settlement, and one third say that their service reductions next year will now be severe. Considering that there is very little fat left to cut, I really worry about those services.
Jim McMahon
The hon. Member must accept that part of the difficulty we have in a two-tier system is the inability to move money around that system. It is correct to say that rural councils, mainly in two-tier areas, have had an increase of nearly 6%, but we have a huge inability to move that money around. There is around £2 billion in the two-tier system that could be freed up through reorganisation of local government, so will he stop looking both ways on reorganisation, and give a commitment on behalf of his party that the Liberal Democrats will support it?
Mr Forster
I thank the Minister for admitting that the 0.3% rise in DCN funding is happening. I do not think he can say that the Liberal Democrats and I are looking both ways on unitarisation, based on the statement earlier and the questions that took this debate later than Members might have wanted. We have concerns about unitarisation, particularly about the way that the Government are doing it. Fundamentally, we welcome reform of local government, but it cannot be imposed on councils and local areas, and we are concerned that that is happening. My county council, Surrey county council, has 14 days of reserves left—that is how bad of a state its finances are in. The Minister has talked about the past 14 years; I am more worried about the 14 days until my local authority, which is protecting vulnerable elderly people and children, will run out of money.
Social care is another area where the previous Government failed miserably, and I worry that Labour is set to repeat the same mistakes. Councils that provide social care are supposed to be better off under this settlement, but the reality is that demand for care is rising, costs are soaring, and local authorities are still struggling to meet their legal needs—I am sure all Members know that from their casework, and we see it time and again in tribunals. The Government’s allocation of funding for social care is simply not enough, and their refusal to commit to long-term reform, and particularly to have a long-term inquiry, will make the problem worse, not better.
On top of that, local authorities are saddled with extra costs from the Government’s policies. The increases in national insurance contributions will push up payroll costs for councils across the country, yet the Government’s package of support is lacking. Councils will be short of hundreds of millions of pounds just from NI contributions, and once again they will be pushed to increase council tax or cut services.
The Liberal Democrats are concerned that rural councils will suffer as a result of the Government’s decision to remove the rural services delivery grant in favour of the new recovery grant. The new grant will be allocated through a need and demand basis, and we are concerned that that will exclude rural councils from critical funding because it does not consider the specific reasons that the delivery of services is more expensive in rural areas.
Sir Geoffrey Clifton-Brown
I am really pleased that the hon. Gentleman has raised the whole business of devolution, because I am going to come on to that at the end of my speech. What I think we should do is build it from the bottom up, as we did, and let local people have a real say in what they want for the future of the delivery of their local services. I am going to say a little bit more about that and ask the Local Government Minister some quiet questions about it at the end.
I turn to a matter that is bread and butter for the Public Accounts Committee, which the hon. Member for Vauxhall and Camberwell Green, the Chair of the Housing, Communities and Local Government Committee, also raised, which is the whole business of local auditing. Without proper auditing, there is no guarantee that all the money—I say “all the money”, but I just mean “the money”—that councils get from both council tax and local government grants, in one form or another, is being spent wisely and providing value for money. The shocking position that we find ourselves in with local auditing at the moment is not, I think, helping the whole system.
The Public Accounts Committee recently held an evidence session on the whole of Government accounts, as the hon. Lady referred to, where we found that 44% of councils did not submit any data at all to those whole of Government accounts, and that 46% of accounts had not been audited for nearly five years, in some councils’ cases. The Local Government Minister has laid before the House measures to ameliorate the timing of producing local audits. Hopefully, we can get to a situation where we can start those local audits and get a set of figures we can begin to rely on. The next year, once we have started with an established set of figures, we hopefully ought to be able to get a properly audited set of accounts.
Sir Geoffrey Clifton-Brown
I will in just a second, but I want to make a really important point to the Minister about why all this matters.
Why does it matter? If we do not have a set of properly audited accounts, we do not have a sound basis on which to know what we are spending money on. As the Local Government Minister knows only too well, it is not only the audited accounts that are important but the assurance that goes with them, so that council officers, councillors and the public—the council tax payers—can begin to get an idea of whether something is going wrong with their council. I say to him gently that if more councils knew that, we might not run into a situation where they issue section 114 notices. However we cut the cake, when a section 114 notice comes into effect and the Government send in officials to run the council, it always ends up with local people getting a poorer service—they have their services cut—that is more expensive in council tax. It is really bad when a council gets into that situation, and that is why we need proper audited accounts.
Jim McMahon
I am only intervening given the hon. Gentleman’s position as Chair of the Public Accounts Committee. I think that this is a common interest for the PAC, Parliament and the Government. I do not want to labour the points about the past; the question now is how we move forward. From our perspective, it is not acceptable at all that the whole of Government accounts cannot be reconciled because of local government audit backlogs, so we want to address that. More importantly—this is definitely where there is a common interest—we must rebuild the early warning system, because what we cannot pick up effectively enough is whether there are systemic problems, which are more than just one council beginning to wobble, that we should be aware of and take action on.
Sir Geoffrey Clifton-Brown
The Local Government Minister must be clairvoyant—or he must be reading my notes.
I warmly welcome the Government’s consultation on local audit reform, which would establish a statutory and independent local audit office. It would be responsible for the co-ordination of the system to provide the quality oversight and reporting that is currently missing. There is even talk about setting up some form of backstop public auditing system. A lot of reforms are being consulted on, which is to be warmly welcomed, and the Government are to be congratulated on tackling this subject. I really hope, as Chairman of the Public Accounts Committee, that the Local Government Minister and the Government succeed in that quest, because if we do it, we will begin to make local government much more efficient. We have not talked much about efficiency, but it is common across public services that if we improve efficiency, we make taxpayers’ money go further.
The consultation document—this is the core of the matter—states that
“just one per cent of councils and other local bodies publishing audited accounts on time last year and a backlog of nearly 1,000 outstanding audits dating back to 2015/16”.
That demonstrates that real reform is needed, and quickly. We are in total agreement, and we will go on examining the matter and pushing the Government to see how we can do that.
I will move on and make some remarks of my own on Gloucestershire county council. First, I pay tribute to the chief executive, Pete Bungard, who has run the council for 27 years—as I will say in a minute, it has been pretty well run financially—and to the retiring council leader, Councillor Mark Hawthorne, who has led the council so well. They will both be sorely missed. It is because it has had such constant leadership that I believe Gloucestershire county council is in a strong financial position today. As a Conservative-led council, it is one of the few that is not raising council tax to the full 5%. It is raising it by only 2.99%. That means, based on a band D property, that residents will pay only an additional £6.65 each month. That is a very creditable performance.
I am pleased that Gloucestershire is on track to invest an additional £32.7 million in local services in critical areas for its residents. That includes £10 million towards road improvements, with a focus on rural roads, as part of a £100 million four-year programme in Gloucestershire. The Public Accounts Committee recently focused on the condition of local roads. Over £1 billion a year is spent on that, but the Department for Transport admitted—this is something we really need to concentrate on—that it did not know exactly how local authorities spent that money, as it is not ringfenced. As with a lot of areas of government, we need better data on how councils are spending money to make sure we get better maintenance of our roads and avoid potholes. I am sure that all Members of Parliament find, whether they are looking through their postbags or knocking on doors, that everyone raises the issue of potholes.
I am pleased that the county council will be investing £12.8 million in a 200-place special school for Gloucestershire. Sending special needs children out of county is one of the most expensive actions that any council has to undertake, and I think that, in the long term, building our own facility in Gloucestershire will be good value for money. As I have said, the Public Accounts Committee carried out an inquiry into special needs, and we reported that the system was broken. This comes back to my earlier point: just spending more and more money when the structure needs to change is not the answer. It does not matter whether we are talking about special needs, children’s social services, mental health services or adult social services; it is just not the answer. We need longer-term structural reform, and I hope we may see some proposals for that from the Government. As the Committee discovered, in the last 10 years the cost of SEND services has doubled, but we are not getting double the service. That demonstrates that the system is well and truly broken.
Let me now say something about a point raised by the hon. Member for Stoke-on-Trent Central (Gareth Snell), my former colleague on the PAC. During the exchanges on the statement this afternoon, I said to the Secretary of State and Deputy Prime Minister that people in Gloucestershire would be pleased that they now have certainty that our elections will take place this year, which means that a new county council will be elected. Can the Minister give any indication—I asked his boss this question—of a timetable for when he expects my council to move towards devolution? I am not against devolution at all, but what I will say loud and clear is that I would like adequate time to be provided for a wide consultation to take place in Gloucestershire so that we can have the wholesale backing of its people and know what they really want the structures for the delivery of local government services to be in the future. If they have bought into it, they will be much happier with any change that may take place.
I should be grateful if we could have that timetable either tonight or in the relatively near future, and if the Minister could explain how a transition might work in Gloucestershire. Will the new council stay in place for four years, albeit perhaps towards the end of those four years shadowing a new unitary authority, so that we do not have elections again within the four-year cycle? That would be very helpful information.
Jim McMahon
On the timetable point, all councils in the 21 two-tier areas for reorganisation will receive their statutory elections. Individual councils will need to decide whether to apply for the process or not. If they choose to apply, we would expect their proposals to be submitted to the Government by November. That is quite a short period for them to work up the proposals, but there will be support in terms of capacity along the route. As for how that unlocks devolution a bit further down the line, we are obviously concentrating on the devolution priority programme at the moment and getting the mayors in place, but the door is always open to areas that want to talk about mayoral devolution.
Sir Geoffrey Clifton-Brown
The Minister has partly answered the question, but he did say that it was a very short timeframe. I understand that we will receive the letter very soon and that is great, but how long will there be after that for the county council to work up a proposal that might be acceptable to the Government? That is what it will want to know. I request earnestly that we have enough time to consult people as widely as possible, for the reasons that I have just given. [Interruption.] The Minister is indicating that he will write to me; that would be very helpful. Perhaps he will put a copy in the Library so that everyone else can benefit, and also respond to the question about whether the newly elected council will be in place for four years or not.
This has been a very constructive debate, as is often the case when there are relatively few Members present. When Members on both sides of the House can get our teeth into a subject like this and come up with constructive proposals on behalf of our constituents, which is what we are here for, we really are achieving something. Thank you, Madam Deputy Speaker, for allowing me to catch your eye.
English Devolution and Local Government
Jim McMahon Excerpts(2 weeks, 3 days ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
Today, I am pleased to announce the list of places that have come forward to join the Government’s devolution priority programme, with a view to mayoral elections in May 2026. I will also provide an update on local government reorganisation and local elections.
Devolution priority programme
In December 2024, the Government published the “English Devolution White Paper”, setting out our approach to widening devolution across England, ensuring the benefits of taking back control can be felt by all. It signalled our commitment to change, a change that will bring growth and opportunity to all parts of the country, by putting power into the hands of local people that know their areas best.
To achieve this, I asked places to come forward to express their interest in being part of our devolution priority programme.
The Government received an extremely positive set of responses, and today I can confirm that we will be taking forward six devolution areas on the devolution priority programme: Cumbria (Cumberland council, Westmorland and Furness council); Cheshire and Warrington (Cheshire East council, Cheshire West and Chester council, Warrington borough council); Greater Essex (Essex county council, Thurrock council, Southend-on-Sea city council); Hampshire and Solent (Hampshire county council, Portsmouth city council, Isle of Wight council, Southampton city council); Norfolk and Suffolk (Norfolk county council, Suffolk county council); and Sussex and Brighton (East Sussex county council, West Sussex county council, Brighton and Hove city council).
The first of its kind, this programme aims to deliver a new wave of mayoral elections in May 2026. It will provide a fast-track to mayoral devolution for areas ready to come together under sensible geographies which meet the criteria set out in the White Paper.
Local people will have a real voice in deciding what is right for their areas, and more control over the things that really matter in their daily lives. New mayors will have access to new powers in the devolution framework and, ultimately, proudly represent their area at the Council of the Nations and Regions.
The six devolution areas on the priority programme will receive the full backing of Government to deliver to these ambitious timescales.
The Government will also continue to work closely with Lancashire, who are already committed to reviewing their devolution arrangements by the autumn, including steps to deepen their existing arrangement. This review will consider all options available for the area, including aligning with the devolution priority programme timeline for mayoral devolution.
I was pleased by the response to my letter of 16 December, showing that the country is ready for change. While selecting those areas best placed to join the devolution priority programme required judgments against the criteria set out in the White Paper, the Government want to maintain the enthusiasm and local consensus for devolution in those areas not being taken forward for mayoral devolution to the fastest timeline. The Government will continue to work closely with those areas to develop their proposals further and continue to widen devolution across England in this Parliament.
The Government see devolution as a new way of governing, rooted in the principle that people who have a stake in a place should be the ones shaping it. It will be crucial to delivering our commitment to bring growth and opportunity to communities across the country. This is the first step in delivering on our promise to move power out of Westminster and putting power where it belongs—into the hands of local people.
Every place has something to benefit from devolution, whether it is more regular bus services, more affordable housing, or the simple fact that local people will have a local champion with regional influence. Mayors, regardless of political stripe, have a proven track record of delivering growth.
But the Government are clear that, where a mayor is not using their powers for the benefit of their residents, the Government have the tools to ensure they deliver. Our White Paper set out our intention to explore a local public accounts committee model to interrogate the decision-making of mayoral strategic authorities; and the English devolution Bill will include measures to reform local audit. Taken together, these measures, and the Government’s wider reforms to accountability and scrutiny, will ensure mayors deliver the houses, transport and infrastructure their residents need.
Delivering devolution commitments
Today, legislation comes into force formally establishing three new combined county authorities and one new combined authority.
Greater Lincolnshire combined county authority and Hull and East Yorkshire combined authority will take their first steps as new strategic authorities tomorrow. Both will elect a mayor for their areas in May this year.
I am proud to say that this Government have delivered mayoral devolution to the whole of Yorkshire for the first time.
Combined authorities for Lancashire and for Devon and Torbay will also be coming into existence, helping local leaders in those areas work better together, delivering better services and growing the local economy.
Together with the areas the Government are taking forward on the devolution priority programme, this would bring the total population who will see the benefit from devolution to over 44 million—close to 80% of the country—demonstrating more progress in a shorter amount of time than any Government in Britain’s history.
Local government reorganisation
Devolution must be built upon strong foundations. That is why this Government are delivering on their manifesto pledge to fix the foundations of local government. The Government’s long-term vision is for residents to access good public services without the eye-watering price tag. That means creating simpler structures to unlock crucial efficiency savings as well as making it much clearer for residents who they should look to on local issues, with fewer but more empowered politicians, and more resources directed to the frontline.
Today, I am also writing to all councils in two-tier areas and small neighbouring unitary authorities to formally invite proposals for reorganisation. I am inviting areas to submit initial plans in the spring, followed by full proposals later in the year, and the Government will then follow the established assessment and decision-making process. We are committed to working with areas to make significant progress on these important changes.
Proposals should seek to achieve, for the whole of the area concerned, unitary authorities which:
Are the right size to achieve efficiencies, improve capacity and withstand financial shocks. As a guiding principle, new councils should aim for a population of 500,000 or more. There may be certain scenarios in which this 500,000 figure does not make sense for an area, including on devolution, and this rationale should be set out in a proposal;
Prioritise the delivery of high quality and sustainable public services to citizens. Proposals should show how new structures will improve local government and service delivery and should avoid unnecessary fragmentation of services. Opportunities to deliver public service reform should be identified, including where they will lead to better value for money. Consideration should be given to the impacts for crucial services such as social care, children’s services, SEND and homelessness, and for wider public services including for public safety;
Demonstrate how local councils have sought to work together in coming to a view that best meets local needs and is informed by local views;
Support devolution arrangements; and
Enable stronger community engagement and deliver genuine opportunity for neighbourhood empowerment.
The White Paper is clear that Government will also facilitate reorganisation for those unitary councils where there is evidence of failure or where their size or boundaries are impacting on their responsibilities. While some of these councils will be included in the invitations for reorganisation in two-tier areas, there is a different legal process for mergers of unitaries. The Government are open to discussions with all areas where structural change will help them get on to a more sustainable footing.
Delays to local elections
The timing of elections can affect planning for devolution, particularly when done alongside reorganisation. That is why the Government wrote to local authorities in December setting out that, where it will help deliver both reorganisation and devolution to the most ambitious timeframe, the Government would be prepared to postpone local elections from May 2025 to May 2026.
This follows long-standing precedent. Between 2019 and 2022, the then Government legislated to postpone 17 local council elections for one year during preparatory local government reorganisation work. Most recently, this included the postponement of elections to three county councils—Cumbria, North Yorkshire, and Somerset— from 2021 to 2022.
The rationale then, as now, is to enable open conversations about proposals and to avoid elections to a council which will cease to exist and where the future structure is unknown. Instead, existing sitting elected members will have their term of office extended for a short period to allow proposals to be developed for new unitary councils. Once these proposals are agreed upon, elections then take place at the earliest opportunity to the shadow authority.
In response to the Government’s letter of December 2024, 18 councils requested that the Government consider postponement of their local elections. Of these:
The Government agree that for eight council areas, postponement is essential for the delivery of the devolution priority programme and complementary reorganisation—Norfolk and Suffolk; Essex and Thurrock; Hampshire and the Isle of Wight; East Sussex and West Sussex. In these areas plans for new combined county authorities, inaugural mayoral elections, and local government reorganisation will all be concurrent and working to a very ambitious timetable.
The Government agree that for one council area—Surrey—reorganisation is essential to unlocking devolution options and a delay would help deliver both reorganisation and devolution to the most ambitious timeframe. The “English Devolution White Paper” discontinued the mayoral single local authority model of devolution. In that context, and given the specific financial challenges, Surrey’s path to devolution is significantly dependent on local government reorganisation.
The Government will not take forward a further nine requests made. While I am grateful to local government colleagues who have been rapidly thinking through proposals, it is right that elections are delayed only when necessary. These are not taken forward either because:
The area was not considered to currently meet the criteria for the devolution priority programme; or
the area is already part of a—mayoral—combined county authority, so an election delay was not considered essential to delivering both reorganisation and devolution to the most ambitious timeframe; or
some areas need to take forward further discussions to reach agreement on devolution plans and so the postponement of the election in these areas is not considered essential to deliver both reorganisation and devolution to the most ambitious timeframe.
Thirty three council elections are scheduled for May 2025. Following these decisions, 24 will continue to take place in May 2025, with nine delayed to May 2026. In addition, in May 2025, six mayoral elections will be held—four for mayoral combined (county) authorities and two for individual local authorities.
For some areas, the timing of the May 2025 elections affects their planning for devolution, particularly alongside reorganisation, and they made requests that involve postponing local elections to May 2026. There is rightly a very high bar for election delays. I have been clear that elections can and should only be delayed to help areas to deliver reorganisation and devolution to the most ambitious timeframe. For places on the devolution priority programme, the parallel process of devolution and reorganisation requires an ambitious timetable, thereby reaching that very high bar.
Next steps
I will bring forward legislation to postpone these elections when parliamentary time allows.
The Government will launch consultations to start delivering the devolution priority programme, giving local communities the opportunity to share views on devolution in their area. Further information on this will be announced in due course.
[HCWS418]
Housing, Communities and Local Government
Jim McMahon Excerpts(2 weeks, 4 days ago)
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Jim McMahon
The permanent relief will come in at 40% in 2026-27, but we have included a transition period.
[Official Report, Non-Domestic Rating (Multiplier and Private Schools) Public Bill Committee, 11 December 2024; c. 77, Q125.]
Written correction submitted by the Minister for Local Government and English Devolution, the hon. Member for Oldham West, Chadderton and Royton (Jim McMahon):
Jim McMahon
The permanent reduction will come in 2026-27, but we have included a transition period.
Jim McMahon
What the evidence says is that there has been provision to ensure that those schools that are mainly or wholly for pupils with special educational needs will not be affected by these measures at all.
[Official Report, Non-Domestic Rating (Multipliers and Private Schools) Public Bill Committee, 11 December 2024; c. 78, Q126.]
Written correction submitted by the Minister for Local Government and English Devolution, the hon. Member for Oldham West, Chadderton and Royton (Jim McMahon):
Jim McMahon
What the evidence says is that there has been provision to ensure that those schools that are mainly or wholly for pupils with an education, health and care plan will not be affected by these measures at all.
Local Government Best Value
Jim McMahon Excerpts(1 month ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
All hon. Members will recognise the importance of having well-functioning local councils that provide essential statutory services that local residents rely upon. To ensure this, we need to get the basics right, resetting the framework to ensure the sector is fit, legal and decent. Government will continue to work directly with a small number of councils in difficulty, and this should be done in a way that is not punitive and is based on genuine partnership to secure improvements.
Today, I would like to update the House on the steps we are taking to improve governance and local accountability in the London borough of Tower Hamlets. On 12 November, I informed the House that I was satisfied, having considered the inspection report of Tower Hamlets council by lead inspector Kim Bromley-Derry CBE DL and assistant inspectors Suki Binjal, Sir John Jenkins and Philip Simpkins, that the council is failing to comply with its best value duty. They found insufficient evidence that the organisation is open and transparent, and values the constructive criticism required to drive improvement. I proposed a statutory support package to secure the council’s compliance with that duty, and gave the council until 25 November to make any representations it wished on the inspection report and my proposal for intervention.
I have now carefully considered the representations the council has made. I have also considered afresh the inspection report and have had appropriate regard to other representations that I have received about my proposed intervention. While I am grateful for the constructive engagement I have had with the council, who have accepted the inspection report’s findings and are committed to working in partnership with Government to deliver the change needed for local people, I remain satisfied that the council is failing to comply with its best value duty in relation to continuous improvement, governance, leadership, culture and partnerships. I have therefore concluded that it is both necessary and expedient for me to exercise intervention powers in the Local Government Act 1999 as I have proposed, with some minor amendments. Accordingly, I have today given the council the necessary directions under section 15(5) of the 1999 Act to implement the proposed statutory support package.
That support package, to be in place until 31 March 2028, is centred on putting in place a team of ministerial envoys to work comprehensively within the council, acting as advisors, mentors and monitors, to oversee its improvement work. I have nominated Kim Bromley-Derry CBE DL as ministerial envoy, and Pam Parkes and Shokat Lal as assistant envoys—all experienced and talented professionals who understand that transparency and accountability are vital to the functioning of local democracy. Enlarging the team to include two assistant envoys rather than one will bring greater diversity of thought to the team and ensure that their approach to the challenges and best practice for local authorities is current. The envoys will report on the council’s progress against its improvement agenda after the first four months, and then regularly as we agree is appropriate.
In summary, the directions I have issued today require the council to:
Work with the ministerial envoys to reconfigure the council’s existing transformation advisory board and draw on existing and additional members to appoint independent and external leads for leadership, governance, culture and partnerships.
Undertake recruitment of a permanent appointment to lead the improvement work in the council.
Prepare and agree with the board a fully costed continuous improvement plan, and report regularly and in public to the board on its delivery.
Co-operate with the ministerial envoys and board leads to prepare and implement comprehensive programmes of cultural change and political mentoring, and report regularly and in public to the board on its delivery.
Have regard to, and respond promptly and in public to, any recommendations from the board with respect to the continuous improvement plan and its implementation.
Work with the Local Government Association to agree a follow-up review visit to the 2023 corporate peer challenge.
Report to the Secretary of State on the delivery of these directions, with these reports having been considered by full council, at six-monthly intervals, or at such intervals as the Secretary of State may direct.
I have also directed the council to co-operate with the ministerial envoys, and to allow them all reasonable access to their premises, documents, employees or members in support of their work. The council is also required to pay the envoys’ reasonable expenses and such fees as I determine.
This support package acknowledges the political mandate the mayor holds, while recognising the need to tackle deeply rooted and persistent issues. It is designed to strengthen and expand the improvement work that the council has already begun, and demonstrates how this Government are committed to resetting the relationship between local and central Government through genuine collaboration and engagement.
This action is not undertaken lightly, and I remain committed to working in partnership with the London borough of Tower Hamlets to provide whatever support is needed to ensure its compliance with the best value duty. I hope that with focus and oversight, the necessary improvements will come at pace, but I have not ruled out the possibility of further action in the future, in the interests of Tower Hamlets residents, should this prove necessary.
I will deposit in the House Library copies of the documents I have referred to, which are also being published on gov.uk today. I will update the House in due course.
[HCWS378]
Draft Devon and Torbay Combined County Authority Regulations 2024
Draft Greater Lincolnshire Combined County Authority Regulations 2025
Draft Hull and East Yorkshire Combined Authority Order 2025
Draft Lancashire Combined County Authority Regulations 2024
Jim McMahon Excerpts(1 month ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I beg to move,
That the Committee has considered the draft Devon and Torbay Combined County Authority Regulations 2024.
The Chair
With this it will be convenient to consider the draft Greater Lincolnshire Combined County Authority Regulations 2025, the draft Hull and East Yorkshire Combined Authority Order 2025 and the draft Lancashire Combined County Authority Regulations 2024.
Jim McMahon
It is a pleasure to serve under your chairmanship this morning, Mr Mundell. Regulations were laid before Parliament on 26 November 2024 for Lancashire and for Devon and Torbay. The Hull and East Yorkshire Combined Authority Order 2025 was laid before Parliament on 4 December 2024, and the Greater Lincolnshire regulations on 11 December 2024. Although I recognise that combined authorities and combined county authorities are distinct legal bodies with different enabling statutory instruments, I hope Members will be content for me simply to use the term “the combined authorities” hereafter, unless there is a specific reason to separate them out.
To deliver on our manifesto commitment, in December 2024 the Government published the “English Devolution” White Paper, which sets out how the Government will widen and deepen devolution across England as part of our central mission to drive economic growth and improve living standards. These instruments are part of fulfilling the mission to move power out of Westminster and back to those who know their areas best. They are significant milestones in the devolution journeys of these four areas. The instruments provide for the implementation of the devolution agreements confirmed on 19 September 2024 between the Government and upper-tier councils in each of the areas concerned. On 18 November 2024, all the respective constituent councils consented to the making of these instruments.
The combined authority order will be made, if Parliament approves, under the enabling provision in the Local Democracy, Economic Development and Construction Act 2009. The three sets of combined county authority regulations will be made, if they are approved, under the enabling provision in the Levelling-up and Regeneration Act 2023. All four authorities will be established on the day after these statutory instruments are made. The Greater Lincolnshire combined county authority and the Hull and East Yorkshire combined authority have chosen to adopt a mayor for their authorities, with the inaugural elections taking place on 1 May this year. The elected mayors will take up office on 6 May, with a four-year term, and will take up their seats on the Council of Nations and Regions.
The statutory instruments make provision for the Government’s arrangements for combined authorities. Each authority has specific arrangements, enabled by either the 2023 Act or the 2009 Act and set out in these establishing instruments. In each case, the constituent councils nominate one or more of their members to form the combined authority, sitting alongside the mayor where one is being adopted. District council representation and input into the combined county authorities is determined locally within the framework provide by the 2023 Act. I know from conversations with local leaders, and through commitments they have made, that district councils will play a key role in ensuring the success of devolution in those areas.
The instruments confer public authority and local authority functions on the respective combined authorities, as agreed in their devolution agreements and set out in each area’s proposals. To accompany the order, we have laid before Parliament a section 105B report, as required by the 2009 Act; and we have laid before the House a section 20(6) report for the regulations, as required by the 2023 Act. The reports provide details about the public authority functions that are being devolved to these authorities. They include powers over transport and Homes England concurrent regeneration functions, as well as mayoral development corporation functions for the mayoral combined authorities. Additional funding will be available to the areas through the adult skills fund, which will be devolved to the combined authorities from the ’26-’27 academic year, as well as education and skills functions.
The Department for Education will work with the combined authorities to support their preparations and ensure that they meet the necessary readiness criteria, and we will legislate in due course when the Secretary of State for Education is assured that they are operationally ready and is satisfied that the required statutory tests have been met in each area.
As provided for in the enabling Acts, the constituent councils consulted on the proposals to establish the combined authorities based on their devolution agreements. Those consultations took place between December 2023 and March 2024 for periods of either six or eight weeks. Councils promoted the consultations using social media, communications campaigns, dedicated websites, and online and in-person events with the public. The councils also undertook targeted stakeholder engagement with businesses, the voluntary sector and key institutions in their areas. Responses could be made online via their website or email, on paper via the post or at dedicated events or collection points such as local libraries.
I can report that the necessary statutory requirements under the 2023 and 2009 Acts have been considered, and that the authorities preparing the proposals have provided the Secretary of State with a summary of the consultation responses when submitting their proposals to the Government in spring 2024.
Lewis Cocking (Broxbourne) (Con)
I draw attention to my entry in the Register of Members’ Financial Interests. Some of the areas that we are looking at are still two-tier areas. Will the Minister outline the Government’s approach? Can two-tier areas create combined authorities, or is it the Government’s ambition that new combined authorities will be created only in areas that are wholly made up of unitary councils?
Jim McMahon
The hon. Gentleman makes a good point about how we manage the transition from where we are today to the situation under the English devolution Bill when it eventually becomes law. We have broad ambitions to widen and deepen devolution, which means that we do not wish to wait for the English devolution Bill to be in place. The expressions of interest that we had had by the deadline last week showed that there is significant interest among local areas that want both reorganisation and devolution. There will be a streamlining of the process between devolution and reorganisation, in which a two-tier area could apply to become a combined county authority today and go through reorganisation, and convert to a combined authority in a single-tier system when that reorganisation has taken place. Those arrangements are transitional. Ultimately, by the time the devolution programme has finished, we expect that in most areas, if not all, the two-tier system will come to an end, with unitary councils forming that combined arrangement.
In laying the draft instruments before Parliament, the Secretary of State is satisfied that the statutory tests under the 2009 and 2023 Acts are met, namely that the constituent councils have consented to the establishment of the combined authorities, that no further consultation is necessary and that making the instruments would be likely to improve the economic, social and environmental wellbeing of some or all of the people who live or work in the area; would be appropriate, in having regard to the need to reflect the identities of local communities and to secure effective and convenient local government; and, in establishing the combined authorities, will achieve the purposes specified in the constituent councils’ proposals. The making of the draft instruments will shift money from central Government to our regions, as set out in their devolution agreements. That includes capital funding for each area and mayoral investment funds for the areas that choose to adopt a mayor.
I personally thank the local leaders and their councils for their hard work and the vital role they play in making the Government’s critical mission to widen and deepen devolution a reality in their areas. I commend the draft instruments to the Committee.
Jim McMahon
I thank the hon. Member for his contribution and for his support for the measures. One thing that has stood out over quite a long period is that belief in devolution mostly rises far above party politics. It is about a structural change in how the country is governed and where power sits. There may be differences about pace, perhaps, and about focus, and there will always be a conversation about resourcing, but Members across the House absolutely support the direction of travel that we are embarking on to take power away from Westminster and put it into the hands of those who know their areas best.
We talk often about precepts. I believe strongly that a precept is the most transparent way for taxpayers to hold to account those who spend public money on their behalf. The reality is that mayoral functions cost money. It costs money to establish a mayoral office and carry out mayoral functions. The more responsibilities and duties we devolve down—there are significant areas of competence in the White Paper—the more mayors and combined authorities will need to marshal to provide the staffing support and resource to deliver them.
There are two ways of doing that. Either we do it through a levy provided to each local authority—through what I would call the back door—that does not appear on people’s council tax bills and is agreed from council to combined authority; or we do it through a precept. The benefit of a precept is that it increases transparency. It is published on everyone’s council tax bill, and they know exactly what they are paying for. In terms of democracy and accountability, it makes it a lot easier for people to hold the mayor to account for the money that is being spent in their name. I accept that in broaching any idea of new taxation, we must take into consideration the fact that people are reeling from the cost of living crisis and recognise the impact of tax, but we are clear that this is not a new tax in the overall sense. This is about transparency in the tax system so that people can see where their money is really going.
The shadow Minister rightly mentions borrowing limits. We have seen examples of local authorities that have borrowed far in excess of their revenue, to the point that they are now financially unviable. We all know the local authorities in scope for that. Combined authorities will agree with His Majesty’s Treasury what their borrowing cap will be, and they will only be able to borrow within that cap, providing they have the revenue to support that borrowing liability.
I have been a councillor in Greater Manchester, and I now represent it as Member of Parliament. We were able to align locally directed money, some of which was borrowing and some of which was local authority contributions, to extend the tram system. The benefit of the tram system was that it unlocked significant private sector investment, allowed central Government to align their capital programme with what we were doing locally and, importantly, had an earn-back mechanism that allowed the ticket sale revenue to be offset against loan liability. In that sense, it is a self-financing model that can grow and grow. Ultimately, the loan will be paid off, but we will always have a tram system that people will use and buy tickets for, and that will generate revenue, create jobs and be good for the economy. Providing that the HMT cap is in place, Members should be assured that it will not be excessive.
The measure is not being introduced in isolation. We are doing a huge amount on the reform of the local government pension scheme, which I and many Members believe has untapped potential for growth in this country. It is the largest pension scheme in the UK, with £400 billion, and the sixth largest in the world. I do not think we realise the benefit of it in our towns and cities for local investment as we should. If we can unlock even a small percentage of additional investment, that could be transformational. The English devolution Bill puts a duty on mayors and their combined authorities, and on pension schemes, to work together to create a pipeline of investable products.
David Simmonds
Previous Governments introduced pensions pooling. There is already a London pool, for example, where 33 London local authorities and the City of London have a pooled pension scheme. Two issues always arise from that. The pension fund trustees have a fiduciary duty in law to serve the best interests of the pensioners. Their obligation is not to seek the best investment from the Government’s point of view, but to do what generates a return so that people can rely on that income when they retire. Having been involved in changing some of the regulations to allow a greater share of the pool to be invested in infrastructure, I am aware that the Treasury has always had considerable concern about that that conflict with fiduciary duty. Ultimately, if there is a shortfall, it will fall back on taxpayers in another form because of the statutory nature of the schemes.
Another issue has to do with the profile of individual pension funds. We know that the London borough of Hillingdon, which serves about two thirds of my constituency, has a much younger workforce profile than the London borough of Ealing next door. The trustees’ investment intentions are therefore based on the need to serve the longer-term interests of a much larger pool of young people who will need those pensions for 50 or 60 years ahead. Ealing’s pensioners are, on the whole, older, and therefore the investment intentions are different.
I would be interested to know what regulatory change the Minister has in mind to address both the conflict between trustees’ fiduciary duties and the Government’s intention to see this as a sovereign wealth fund, which potentially it could be; and the fact that the different workforce profiles of individual pension funds may make their pooled investment choices more challenging.
Jim McMahon
I will be careful not to stray too far from the subject, but given that I raised it, I will say that we are out to consultation on pension funds. The exact construction of the requirement to invest via pools rather than via individual pension funds is still subject to discussion. We accept, of course, that pension fund members and boards will always have fiduciary duties. The English devolution Bill does not require blind investment regardless of the consequences; it requires an investable product to be created. That is the test. Is it safe and secure, and does it provide a return on investment that can hold water? That is a requirement.
The investment pot is £400 billion, so even 5% of that—unlocking £20 billion of investment to UK plc—would be significant and could be game-changing. We need to keep that in context, but it must be approached with caution, given that in the end, the fund must be there for pensioners and future pensioners.
The legislation delivers the commitment made in the devolution agreements with Devon and Torbay, Greater Lincolnshire and Lancashire to establish combined county authorities, and to establish a combined authority for Hull and East Yorkshire. I commend the regulations and the order to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Devon and Torbay Combined County Authority Regulations 2024.
Draft Greater Lincolnshire Combined County Authority Regulations 2025
Resolved,
That the Committee has considered the draft Greater Lincolnshire Combined County Authority Regulations 2025.—(Jim McMahon.)
Draft Hull and East Yorkshire Combined Authority Order 2025
Resolved,
That the Committee has considered the draft Hull and East Yorkshire Combined Authority Order 2025.—(Jim McMahon.)
Draft Lancashire Combined County Authority Regulations 2024
Resolved,
That the Committee has considered the draft Lancashire Combined County Authority Regulations 2024.—(Jim McMahon.)
Oral Answers to Questions
Jim McMahon Excerpts(1 month ago)
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Ian Roome (North Devon) (LD)
The Minister for Local Government and English Devolution (Jim McMahon)
On 16 December, I wrote to all councils in two-tier areas and neighbouring smaller unitaries, including in Devon, to set out plans for a joint programme of devolution and local government reorganisation. Later this month, I intend to formally write out to those councils on the shortlist to ask for interim proposals by March and fuller proposals later in the year. We will confirm that as soon as possible, because we know it is important to have clarity.
Ian Roome
Obviously, any reorganisation will impact council finances. My constituency of North Devon has coastal towns with real pockets of remote deprivation, isolation and poverty. Now that the Minister’s Department has cut the rural services delivery grant, what methodology will be used to ensure that local government funding does not overlook those areas?
Jim McMahon
With respect, the hon. Gentleman is conflating two entirely separate issues. One is reorganisation, which will take money away from the back office and put it on the frontline where people can see the benefit of that investment, but to be absolutely clear on rural services, the provisional settlement that was laid out ensures that primarily rural councils get an average increase of 5%, and no council sees a net reduction in its income levels. That is our commitment to rural communities, and it is firm.
Vikki Slade (Mid Dorset and North Poole) (LD)
I refer the House to my entry in the Register of Members’ Financial Interests as a serving councillor on Bournemouth, Christchurch and Poole Council.
Many councils have already undergone significant reorganisation, from moving to shared services right the way through to full unitarisation, and the costs of that have always been underestimated. Although transformation leads to lower long-term revenue costs, we know that councils everywhere are teetering on the edge, so finding funds to pay for reorganisation, transformation and redundancies will be problematic. The mayoral authorities add an extra complication, so can the Minister confirm that funding from central Government will be provided to fully cover both devolution and local government reorganisation, so that councils do not have to factor extra costs into their 2025-26 and 2026-27 budgets or risk reducing local services further?
Jim McMahon
The Government are not requiring any area to reorganise. What we did was write out and invite proposals to be submitted, and I pay tribute to councillors across the country for the leadership they have shown in putting those proposals forward. Investment to support LGR or devolution will follow a bit later, but to be clear, this is a bottom-up reorganisation being requested by local councils, and they have our full support in that process.
Ruth Jones (Newport West and Islwyn) (Lab)
Jodie Gosling (Nuneaton) (Lab)
The Minister for Local Government and English Devolution (Jim McMahon)
The English devolution Bill will strengthen public services by delivering local government reorganisation and establishing more directly elected mayors, who will have the new power to convene public services. The Bill will also deliver a new health improvement duty for strategic authorities, and enable more mayors to take on responsibility for police and crime commissioner functions, and health functions as well, to co-ordinate better on local public services. Beyond mayors, the White Paper reasserts the role of local authorities as leaders of place and the delivery arm for the Government’s missions.
Jen Craft
The catastrophic impact of the level of debt left behind by the previous Conservative council is being felt all over Thurrock. Our services have been cut to the absolute quick, and delivery for residents is at an all-time low. Although I welcome the impact that devolution will have on growth and value for money, what reassurances can the Minister offer that devolution will finally give us the chance to turn the page and deliver where it matters for my constituents?
Jim McMahon
That is a shared ambition. The Government are determined to take power away from Westminster and put it into the hands of local communities. We know that driving better outcomes and better public services rests on fair funding, and for too long councils have been impoverished, while more expectations have been placed on them. The funding reforms we are consulting on will be part of rebuilding the foundations, but this is a very significant project to get power away from this place to local communities.
Jodie Gosling
English devolution provides a generational opportunity to unlock the potential of towns such as Nuneaton. I thank the Minister for his time and support in ensuring we get these options right. Will he continue to meet me and council representatives to discuss the best options for unlocking growth and opportunity in Nuneaton?
Jim McMahon
I thank my hon. Friend and the many other MPs with whom I have had meetings to talk about devolution—at the last tally, about 140 one-to-one meetings with MPs have taken place, such is the interest being shown in devolution for the right reasons. I am more than happy to continue those conversations and to welcome the local leadership being shown.
Mr Peter Bedford (Mid Leicestershire) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. Several Mid Leicestershire villages such as Glenfield, Birstall and Braunstone town are extremely anxious at the prospect of being forced into a large city unitary as a result of the English devolution Bill. Will the Minister agree to meet me to discuss this matter, and will he give my constituents the assurance that they will not be forced into a city unitary against their wishes?
Jim McMahon
It is important to say that any requests for local government reorganisation are proposed to Government by the local areas. It is for the Government to provide the process by which those applications are heard. Over at least the last four years, local authority elections have been postponed countless times to allow reorganisation to take place. To be clear, there is a bottom-up approach for both the postponement of elections and the boundaries that are drawn for the unitaries. Our job is to ensure that the process supports that approach.
Mike Martin (Tunbridge Wells) (LD)
I want to ask about the interaction between the planning reforms and devolution, which are two huge bits of legislation. In Tunbridge Wells we have a local plan, but we have been asked when we do our new local plan to have a 66% increase in houses. Except, we will not have a new local plan because Tunbridge Wells borough council will cease to exist—it will become part of the West Kent unitary authority. How will these two huge reforms interact and what will it mean for housing numbers in Tunbridge Wells?
Jim McMahon
In a sense, a council is only an organisation at a point in time, but there will always be a local authority responsible for the area. We want to ensure that the authority is strategic but also takes that wider view. Reorganisation is of course part of that, but, importantly, a strategic authority can also take wider responsibility for aligning public service reform with local growth. The hon. Gentleman talks about housing numbers and we can sometimes miss how important that is: housing targets are one thing, but we must not forget that for every one of those numbers there are people and families who currently do not have a safe and affordable place to live. This agenda is about tackling exactly that.
Mary Glindon (Newcastle upon Tyne East and Wallsend) (Lab)
John Glen (Salisbury) (Con)
On Friday, I met the leader of Wiltshire council, who asserts that the way the Government have calculated the distribution of compensation between in-house and commissioned services means that Wiltshire has not fared well in the local government settlement that was announced on 18 December. Will the Minister meet me so that I can better understand the thinking and relay it back to the leader of my council?
The Minister for Local Government and English Devolution (Jim McMahon)
We know that local government is feeling the pressures after 14 years that did not bode well for local and public services. We understand the pressures associated with national insurance, which is why the Treasury has committed £515 million to support councils in that endeavour. I am more than happy to meet the right hon. Gentleman about his particular circumstance.
Brian Leishman (Alloa and Grangemouth) (Lab)
Are the Government considering compensation schemes for homeowners who have suffered financial losses due to reinforced autoclaved aerated concrete in their properties? If so, I am especially interested in the Barnett impact for the Scottish Government of any such scheme, as I have constituents from Tillicoultry whose lives have been seriously impacted.
Local Government Reorganisation
Jim McMahon Excerpts(1 month, 1 week ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
David Simmonds (Ruislip, Northwood and Pinner) (Con)
(Urgent Question): To ask the Minister to make a statement on plans for local government reorganisation.
The Minister for Local Government and English Devolution (Jim McMahon)
The English devolution White Paper sets out how this Government plan to deliver on our manifesto pledge to transfer power out of Westminster through devolution and to fix the foundations of local government. This Government’s long-term vision is for simpler structures, making it clearer for residents who they should look to on local issues, with more strategic decisions to unlock growth and to deliver better services for local communities.
On 16 December 2024, I wrote to all councils in the remaining two-tier areas and neighbouring small unitaries to set out plans for a joint programme of devolution coupled with local government reorganisation. We acknowledge that for some areas the timing of elections affects their planning for devolution, particularly alongside reorganisation. To help to manage these demands, we will consider requests to postpone local elections, as has been the case in previous rounds. Where local elections are postponed, we will work with local areas to move elections to a new shadow unitary council as soon as possible. This is a very high bar, and rightly so.
The deadline for such requests was Friday 10 January. Today, my Department has published a list of all county and unitary councils who have made requests, including those who want to delay elections from 2025 to 2026. For the avoidance of doubt, this is the list of requests; it is not the final list that will be approved. We will consider these requests carefully and postpone elections only where there is a clear commitment to delivering both reorganisation and devolution to the ambitious timetable set out. While not all areas listed will go forward to be part of the devolution priority programme, we are grateful for the local leadership shown in submitting these requests, and a decision will be made in due course as soon as possible.
We welcome the large number of areas that have come forward seeking to join the devolution priority programme, reflecting our own ambition for greater coverage across England. This Labour Government were elected on a manifesto to push power out of Westminster and to relight the fires of our regions, and I am delighted that local leaders across England are sharing that ambition.
David Simmonds
Although it was not a manifesto commitment, the Government published their agenda for reorganising council structures in England before Christmas, and we support our local government colleagues who are clearly required to respond to that call from Government. With local elections scheduled to take place in May this year and councils already incurring significant costs arranging polling stations and electoral canvassing, and preparing to receive nominations and issue postal ballots, it is not surprising that many councils have acceded to the Government’s expectation of a delay in these polls. After all, why incur millions in costs to local council tax payers for electing people to councils that are to be abolished shortly afterwards?
However, there remains significant uncertainty about where and if those elections will be delayed. With deadlines looming for key points in the organisation of those elections, that uncertainty risks some wasted costs for council tax payers, so we on the Conservative Benches have a series of questions. We know that many of those councils are Conservative-run, and with Conservative councils charging on average £80 less per household than Labour ones and £21 less on average than Lib Dem ones, voters will want to understand the impact of the Government’s reorganisation on their council tax and on their back pocket.
May I ask the Minister, first, what assessment has he made of the Boundary Commission’s capacity to undertake the necessary reviews to ensure equal distribution of electors across the new local authorities? Can he give an indication to the House of when he will make decisions, so that local authorities will know whether they are preparing to organise elections and are willing to incur those costs or not? We know that a number of other announcements are in train, particularly the indication from the Deputy Prime Minister that areas currently setting a low level of council tax will be punished through revisions to the funding formula, so when can local authorities expect to know what impact such revisions to the funding formula will have? I look forward to informative answers from the Minister.
Jim McMahon
I thank the hon. Gentleman for those questions, and I am genuinely grateful for the spirit of consensus around the broader issue. I accept that there may be differences of opinion on pace, but we do not shy away from our ambition to see devolution experienced by the whole of England. I give a degree of credit to the previous Government for building out devolution in the north of England and the midlands, but surely we have to demonstrate that this project is not reserved for the north of England and the midlands. This is a project for the whole of England, and we are on with that.
Our determination to ensure that we deal with these structural changes early in the Parliament is clear, but that is shared by local government. It is important to say that although of course we will set the timetable and provide support on both the devolution priority programme and local reorganisation, it is for local areas to self-organise and to agree to be part of the programme. We are not mandating this; we are not forcing it. All the requests that we have had since Friday have been from areas who share our ambition.
The hon. Gentleman will know that it is sensible to take the approach that, if reorganisation is a genuine proposal—and the bar has to be high for that test—it is nonsense to have elections to bodies that simply will not exist. It is far better that we move at pace and create the new unitary councils and then hold elections at the earliest opportunity.
I am not going to get into the subject of council tax, partly because it is outside the scope of the hon. Gentleman’s urgent question. Also, he was slightly mischievous in the way that he framed his remarks. On the point about capacity, however, it might be helpful if I lay out what the process will be. Local areas will make the request. We will issue statutory invitations at the end of the month, and areas will need to self-organise. It is not for the Boundary Commission or the Government to lay down which plans come forward. It is for local areas to submit proposals to us, and at that point the Government will decide on the right proposals among what could be a number of options that come forward from local areas. Again, it will be for local areas to self-organise and make those proposals to us.
Madam Deputy Speaker (Caroline Nokes)
I call the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I thank the shadow Minister for securing this important question; he has highlighted some key issues.
Sadly, we know that our councils are at breaking point. The Select Committee’s first major inquiry is to look at local government finances, and we look forward to engaging with the Minister on it. It was reported that local authorities in England were facing £77.5 billion-worth of debt by the end of last year. Much of that is debt to central Government or from borrowing. Sadly, because of that, vital frontline services such as housing and social care are at breaking point. Residents cannot afford to be caught up in buck-passing or discussions about accountability if this reorganisation goes through, so can the Minister assure the House that residents will still have the same level of power and scrutiny over vital services during the reorganisations?
Jim McMahon
I thank the Chair of the Select Committee for those questions. What I hear from residents and even from councillors in two-tier areas is that, more often than not, local residents have no idea which council to go to in order to get the answers they need on local services. Reorganisation will provide efficiency savings in organisational costs that can be directed towards frontline services, which we believe are the priority for taxpayers. There should not simply be the cost, in many cases, of such services existing. We also believe that it is right, from a democratic accountability point of view, that residents have a clearer line of sight on which body to hold to account for local decisions.
On the point about local government finance, which we absolutely understand and accept, we have worked hard and I would say we have been relatively successful on rebalancing the funding crisis in local government. We have done that by providing £5 billion of new money, taking the total allocation to £69 billion. We cannot undo 14 years of damage in six months—it has been damaging over the 14 years—but we are now bridging to that multi-year settlement where we can really begin to repair the foundations. I think we have made progress on that.
Vikki Slade (Mid Dorset and North Poole) (LD)
There is no doubt that local government needs significant reform, and Lib Dems are passionate about putting power into the hands of local communities, but we are concerned that rather than producing true devolution, these plans will end up as a top-down diktat from Whitehall. MPs and district councillors from areas including Devon, Surrey and the midlands have told me that submissions appear to have been made without their district councils being involved or consulted, and without the opportunity to undertake consultation with residents and businesses. What steps are the Government taking to ensure that they engage meaningfully with every level of councils?
Councils such as Bournemouth, Christchurch and Poole, which I used to lead, face Hobson’s choice. Tonight, councillors will be voting on whether to join proposals to their east or their west, neither of which reflect their urban needs or their distinct character. Or do they sit it out and hope for the best? What plans do the Government have to ensure that residents will have the democratic ability to decide on the right devolution plan for them? Can the Minister confirm, given that these plans will take more than a year to implement, that all the elections due in May 2025 will go ahead?
Jim McMahon
I do not want to disregard the good work of district councils in this conversation about reorganisation, and about redirecting money to operational costs on the frontline, so that taxpayers get better value for money and see the benefit in their local public services. I pay tribute to council officials, frontline workers and councillors, whether they are in unitaries, counties or districts, for their work. I just set out the view that the best way to achieve efficiency is by having more streamlined local government structures that enable money to go to the frontline.
On whether district councils will have a voice in the process, it is a fact that we have received requests for reorganisation, and statutory invitations go out at the end of the month, but it would be usual for the Government to be faced with a number of options for what those new boundaries might look like. The county might have a view about how many councils should be included in the reorganisation, and I suspect that districts might have a very different view.
It would be quite usual for a number of different proposals to come forward for a county. It is for the Government to try to strike a balance that takes into consideration identity, efficiency and having an anchor to the area that makes sense. We genuinely want this to be a collaborative process, so that we get the right outcome for local people.
Mr Paul Foster (South Ribble) (Lab)
As the Minister is aware, I was a district council leader in Lancashire until 5 July, when I got the Avanti train down to Westminster. As I have said for many years, the challenge we face is that the two-tier system does not work. It confuses our residents. The Local Government Association’s map of the different structures of local government in England is a mishmash, and it does not work. West Lancashire and South Ribble borough councils have put forward detailed proposals for local government reorganisation to the Minister, but the Conservative-run county council has not. My concern is that some elections will be cancelled and some will not. On the priority programme, will the Minister please consider enforcing the cancellation of all elections in places where he is moving forward quickly with reorganisation?
Jim McMahon
When my hon. Friend said he got the Avanti train down on 5 July, I think the Chamber was half expecting him to say that he had only just arrived, but he has been here for some time.
I know there are different views in Lancashire on what a good outcome looks like, and there are certainly different views on what a good process looks like, but I think there is a shared view that the time has come for devolution in Lancashire. When people look to Greater Manchester and the Liverpool city region, and see that Cumbria and Cheshire are organising to be part of the next stage, of course they want to be part of that. Lancashire is unique, in that we were already in discussions with it about its timetable and process. The level 2 agreement that is in place of course comes with investment, funding and other powers. Lancashire has agreed that by autumn, it will submit proposals to the Government that reconcile its organisational status; it will also bring forward a plan to move forward with a mayoral combined authority. Lancashire took the view that given that the timetable was already in place, it did not need to request that the election be cancelled.
To be clear, we absolutely see Lancashire as part of our priority work. It is critical. The prize for the north of England is completing the work on Cheshire, Lancashire and Cumbria, so that the whole north of England has mayoral devolution. That will be game-changing.
Lewis Cocking (Broxbourne) (Con)
I draw Members’ attention to my entry in the Register of Members’ Financial Interests.
In the devolution White Paper, the Government set half a million people as the appropriate size for these new councils. Can the Minister therefore rule out creating big super-councils that represent more than a million people? Will he meet me to discuss devolution and local government reorganisation in Hertfordshire?
Jim McMahon
It is important that the Government set out the framework. We were very directive in the White Paper about our view on reorganisation and devolution. In every conversation we had with the LGA, the County Councils Network, the District Councils Network and others, we heard that the worst outcome would be the White Paper speaking to an issue without going close to clarifying what outcome we want. The response to the priority programme has been reflective of that clear direction.
We were up front in saying that, for efficiency, new unitary authorities should have a population of around 500,000, but we also made it clear that if the reorganisation went hand in hand with devolution, a degree of flexibility would be needed to make sure we balanced strategic oversight of the combined or strategic authority with the local identity and sense of belonging that people need. I also make it clear that it does not matter whether we are talking about councils going through reorganisation, or about existing councils and metropolitan authorities, be they in London or the north of England. Wherever they are, we expect councils to organise their neighbourhoods and communities, local public services and democratic engagement so that people feel more power in the place where they live.
Daniel Francis (Bexleyheath and Crayford) (Lab)
My residents in Crayford, in the London borough of Bexley, have their services provided by one council, but in many cases, residents on the same road have their services provided by two councils—by Kent county council and Dartford borough council—which causes confusion, as the Minister said. Does he agree that the changes introduced in the English devolution Bill will make local government more effective and save money for those taxpayers?
Jim McMahon
That is exactly what this is about. This is the most ambitious reorganisation in England for at least 50 years, maybe longer. We need to avoid the sense that this is just rearranging the local government deckchairs. It is not about that. The devolution White Paper is ambitious, and that ambition is about wresting power from Westminster and Parliament and putting it in the hands of communities up and down the country. For far too long, power has been held in a very narrow way by a handful of people, at the exclusion of millions of people in this country. Frankly, people have had enough, so we have to find a different route.
Kit Malthouse (North West Hampshire) (Con)
I am fortunate to work with two local authorities, Basingstoke and Deane borough council and Test Valley borough council, which, after many decades of careful stewardship, are debt-free and have significant assets on their balance sheets, to the benefit of their residents. What will the Minister do in this local government reorganisation to protect that legacy? Would it not be profoundly unfair if those many years of careful stewardship were wiped out by amalgamation with more profligate neighbouring councils?
Jim McMahon
It is not my intention to set one council against another. When areas begin to look at what new unitary boundaries might look like, they will need a view on identity, scale and achieving efficiency, and, ultimately, what construct will deliver good public services, be it adult social care, children’s services or those neighbourhood services that, in many places, have been eroded to the point where people wonder if they exist at all.
We have to rebuild from the ground up. This process, regardless of a council’s debt or financial status, is part of that rebuilding. Let us be honest: nobody in this Chamber, or in this Government, can put a number or this. We do not know what the outcome will be. If this is genuinely about local areas self-organising and presenting to Government their view of what a good outcome would be, we need to be open about that.
Alice Macdonald (Norwich North) (Lab/Co-op)
Local government reorganisation and full devolution is long overdue, and I believe it will bring many benefits to Norfolk and Norwich. In Norwich North, just as my hon. Friend the Member for Bexleyheath and Crayford (Daniel Francis) said, one council might collect the bins on one side of the street, and another collects them on the other side. Building on the questions from Opposition Members, can the Minister reassure us that cities like Norwich will have a strong voice in this process, and will have their voices heard on the key economic drivers?
Jim McMahon
That is a very important point, and I pay tribute to MPs in Suffolk and Norfolk for the work that they have done in making the case for greater devolution of powers. I also pay tribute to county and district councils for the cross-party political leadership that they have shown in pursuit of devolution. Members will know that the original agreement for both Norfolk and Suffolk was not one to which the Government could agree, for a number of reasons that have been identified. However, the commitment from leaders in the area to finding a way through is appreciated and valued, and we will honour that in the next steps.
We absolutely believe that in large parts of the country—I see it in Exeter, Lincoln, Ipswich and Norwich—we have important economic anchors in cities that previously have not had a seat at the devolution table because they have been district councils. We have to deal with that as we go forward.
Mr Lee Dillon (Newbury) (LD)
Will the Minister update the House on the capacity in his Department to manage these reorganisations? He spoke about the deadline having passed, and having received expressions of interest. How many can his Department manage at any one time? What will be the determining factor in which ones are chosen to progress now?
Jim McMahon
The Department stands ready to support local areas, both on devolution and on local government reorganisation, and will make sure that there is a genuine partnership when it comes to ensuring that capacity. We will not just rely on local areas to find it; we will work together on that.
We will have to present the information the hon. Member refers to on another date, not today. Until we know what the final programme is, we will not know what is required to deliver it. There is no arbitrary upper limit. Nevertheless, we need to be realistic that there is a high bar on devolution and reorganisation, and we can only allow forward plans that have a credible proposal for devolution. If plans are less developed when it comes to devolution, then even if other parts of them are compelling, and do things that we would want to see come about, politically, I am afraid that cannot stand. They have to be credible plans that ultimately lead to fulfilling the ambition for devolution, and that will be the priority.
Jen Craft (Thurrock) (Lab)
The historical bankruptcy in Thurrock, from which my constituents are still suffering, is symptomatic of a system of local government that is letting people down badly. Devolution and reorganisation represent a once-in-a-generation opportunity to capitalise on growing opportunities in Essex, deliver better value and improve services. Does the Minister agree that reorganisation is the right step, and this is the right time? It will allow us to move on from the broken system and deliver more power and opportunities to communities in places such as Thurrock.
Jim McMahon
My hon. Friend will know that there are particular issues in Thurrock, relating to historical decisions taken in that local authority. We believe that efficiencies can be garnered through reorganisation, and that if we redirect money to neighbourhood services that people can see and feel, their satisfaction with local government and local public services will increase. We also accept, though, that some systemic problems are not addressed by reorganisation alone; in the end, the multi-year settlement and the funding reforms that are taking place will have to be the foundation for that.
Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)
The people of Gloucestershire are expecting elections this May to their county council. If that is not to happen, will the Minister tell us precisely when the date will be decided, for all the reasons so excellently set out by my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds)?
Jim McMahon
The hon. Gentleman makes a fair point. Clarity is important for areas; they need to know whether they will go ahead with elections so that they can organise. We seek to give clarity by the end of the month, so in a couple of weeks at most.
Andy MacNae (Rossendale and Darwen) (Lab)
I associate myself with the excellent remarks of my Lancashire colleague, my hon. Friend the Member for South Ribble (Mr Foster), and I thank the Minister for recognising the massive opportunity that reorganisation and devolution presents for Lancashire. It has been held back for many years by our inability to come together and move forward. Given that we now have an ongoing devolution process, and genuine proposals for reorganisation that are supported by a majority of councils across the county and by MPs, and given the significant costs of holding local elections—£3 million in the case of Lancashire, which could fill an awful lot of potholes—it feels like Lancashire county council’s refusal to put forward a proposal to cancel the upcoming May elections is about self-interest and short-term political imperatives being put ahead of the needs of residents. Does the Minister agree that it is regrettable, to say the least, that the request has not come forward, and that we should not hold those elections, but put the needs of residents first?
Jim McMahon
I will be careful. When we came into government six months ago, I was clear that we needed to reset the relationship between central and local government. For many years in opposition, I observed Governments parading around instances of councils that were in disagreement in a very public way, and I thought that undermined the system as a whole. While it might not always be possible, where there are differences of views, they should probably be aired in private and not in Parliament, from a ministerial point of view.
Even though there are differences in Lancashire about pace, potentially, and about what a good outcome might be, there is at least agreement that devolution is the right thing for the county, and that having the same powers as Greater Manchester and the Liverpool city region could be game changing for Lancashire’s economy and local jobs. When I say “local jobs”, I mean skilled, decent work that gives people pride of place; that is absolutely central to this Government. Let us focus on agreement, and put some of the disagreements to one side. However, I take on board my hon. Friend’s local perspective entirely.
Dame Karen Bradley (Staffordshire Moorlands) (Con)
I am pleased to see that Staffordshire is not on the list and that we will have our county elections this May. The Minister will know, however, that my constituents do not want to be subsumed into greater Stoke-on-Trent. Will he give them some reassurance—any at all—that they will have the choice and can say no if they do not want to be part of greater Stoke-on-Trent?
Jim McMahon
I quite like Stoke-on-Trent; I am not sure what the local disputes are there. Maybe that is something not to go into. Focusing instead on process, that change would require consultation, and every area that has had a devolution agreement and eventually a mayoral election has had that consultation take place. There was some recent polling that said that the public were more likely to be supportive of the mayoral model of government if they had a mayor already in place, because they could see the benefit. In the end, how we reconcile the situation England will require compromise in some places. I say that because England is unique, it is diverse and, from an identity point of view, there is much that different areas have in common but there are some contradictions too. It is our job, through the course of building this out, to work at a local level to try and find the right solutions. That commitment is firm.
Several hon. Members rose—
Louise Jones (North East Derbyshire) (Lab)
The reason I am in this place and my absolute priority is to ensure that we deliver good public services to the people of North East Derbyshire, through well-run government with representatives who are invested in their local community and held to account. Will the Minister assure me that any discussions over reorganisation will include local boroughs and districts, and that any agreement reached will make sure that we reflect both those priorities?
Jim McMahon
The request can come in for reorganisation, but the Government’s role from the point at which we start the statutory invitation process becomes quasi-judicial. We therefore need to make sure we steer well clear of defining what outcome we want because we are, in effect, neutral in that process. It is our job to receive proposals as they come forward, and it could well be that the county and district councils put forward entirely different proposals. It is our job to make sure we consider both on an equal basis.
Mr Will Forster (Woking) (LD)
As the Minister knows, the former administration at Woking borough council racked up debts of £2.1 billion. That money will never be fully repaid to the Government, but surrounding local authorities are anxious that as part of reorganisation they might have to share that debt. Will the Minister confirm how the Government will handle debt in Woking, Surrey and elsewhere as part of the reorganisation? Also, will he agree to write off Woking’s unsustainable debts to ensure that reorganisation happens sensibly?
Jim McMahon
Agreeing to write off £2 billion of debt at the Dispatch Box would be quite career-limiting, I would say. I can say, however, that the scale of the financial challenge in some areas is absolutely understood and we will work to try and find a solution. We are not yet at the point of announcing that, however.
Mr Jonathan Brash (Hartlepool) (Lab)
In Hartlepool, 75% of every penny spent by the council is spent on social care. That is contributing to a burden on council taxpayers in Hartlepool that is far too high. Does the Minister agree that in the wider local government reorganisation, consideration needs to be given to regional collaboration on social care or, indeed, removing social care from local government altogether to ease the burden on council tax payers?
Jim McMahon
My hon. Friend will be aware that Dame Louise Casey is conducting a broader review of adult social care for reasons that are well understood by the House. On whether the matter should or should not sit with local government, I will say that where local government really excels is in being local and rooted in the community, in being the deliverer of a public service and in being able to organise at a place level. That does make a difference, and we should not underestimate the impact when done well. We need to make sure that social services are adequately funded for the work they have to do to provide a good level of service for local people.
Mr Richard Holden (Basildon and Billericay) (Con)
Across Basildon and Billericay, my residents are concerned about the idea of two years of delay while massive reorganisation goes on locally. Will the Minister provide reassurance that the local plan for 27,000 new houses across the area, which has just been consulted on, will not suddenly be rushed through by a local council that will not exist in future, with residents having to live with the consequences for years to come?
Jim McMahon
I would say that, given our housing crisis, 27,000 new homes seems like good news to me, and we need to see more of that. Councils need to operate in a business as usual way, making sure that they get their business done. The worst outcome would be for councils going through a reorganisation to press pause on important items of business. That would be a complete absence of leadership.
Alex Mayer (Dunstable and Leighton Buzzard) (Lab)
One effect of creating more strategic authorities appears to be the splitting of transport and highways powers in more areas. Will the Minister provide assurances that this will not slow down the delivery of capital projects that are necessary to achieve economic growth?
Jim McMahon
No, that is certainly right. Our ambition is for acceleration, not for lagging behind, and we will make sure that no schemes are delayed as a result of reorganisation.
Bradley Thomas (Bromsgrove) (Con)
The Minister has quite rightly pointed out that residents across the country expect councillors to take a more strategic approach to deliver better services. My residents across Bromsgrove and its villages share that ambition. However, the biggest elephant in the room is the role of adult social care in the local government sector. Can the Minister outline to the House what decisions and what conversations are taking place across Government to address this so that future new councils, post reform, get off on the very best foot to improve their areas?
Jim McMahon
I feel that we have gone a long way to doing that, although we do accept that this is a bridging position to get us to the multi-year settlement. None the less, £3.7 billion of new money for adult social care in the settlement is a commitment laid out in pounds and pence in the way that local government has been asking for. We accept that there is a long way to go, and that councils need more support, but the Government are absolutely committed to rebuilding the foundations of local government and putting it on an even keel.
Chris Vince (Harlow) (Lab/Co-op)
I thank the Minister for his statement. Many of us across the House will have campaigned in district elections, as I have in Harlow. The No.1 thing that comes up on the doorstep in district elections is potholes, even though they are not the responsibility of district councils. Does the Minister agree that this English devolution Bill will not just simplify local government but be more cost-effective and bring more value back to the taxpayer?
Jim McMahon
My hon. Friend makes a very good case for reorganisation, and I agree with him.
Martin Vickers (Brigg and Immingham) (Con)
As the Minister will know, in Lincolnshire, where there are two unitaries as well as the county council, the three top-tier authorities have agreed on a package to go unitary. There are complications, because there is a ward boundary review going on in north-east Lincolnshire at the moment. Would the Minister consider cancelling that, as it seems a complete waste of resources? In the county council area, which covers roughly two thirds of the county, a mayoral election is taking place, and a new combined authority is being established this May. Given that, does he agree that it is important that elections go ahead to give the county a new mandate for what lies ahead?
Jim McMahon
From our perspective, we cannot allow the cancellation—or postponement, I would say—of elections to be driven by any political views. We are clear that this is an administrative process and it is about whether areas satisfy criteria that meet our devolution priority programme. Where areas are already in the programme because they have mayoral elections this year, it would be reasonable of me to say that we would need to see where the benefit is of elections being cancelled, given that devolution is taking place. But as I have said, we have only just received the proposals. We are taking time to review them, and we will make sure that is done in a fair way.
Sean Woodcock (Banbury) (Lab)
I refer the House to my entry in the Register of Members’ Financial Interests as a serving district councillor for 13 years.
I broadly welcome the thrust of this document. My question is on a matter that the Minister has already referred to—areas that are serviced by a number of different local authorities, which mine is. I have a county council, two district councils, any number of parish councils, and Banbury town council—Labour-run for the first time ever. In those areas, there will be a wide variety of views as to what a local government reorganisation should look like, because different communities have different views. Can the Minister assure me that the fast-tracking and the speed of this process, which I acknowledge the reason for, will not lead to rushed proposals that do not take into account what communities actually feel and look like?
Jim McMahon
I can absolutely assure my hon. Friend of that. Let me just say that in 2019, 11 district council elections were cancelled to allow reorganisations to take place, and so were seven in 2020. In 2021, the elections of three county councils and three district councils were cancelled to allow reorganisation. I say that because we cannot allow people to think that this is, in any sense, something new that has come out of nowhere. This is the day-to-day business of reorganisation done in the right place, in the right way, with full public consultation.
Rupert Lowe (Great Yarmouth) (Reform)
Given the abject failure of devolution in both Scotland and Wales and the fact that the Americans fought a war of independence on the slogan “No taxation without representation”, my constituents of Great Yarmouth would like an answer to two questions. First, why should they continue to pay their council tax beyond May, when they will not be represented by elected people? And secondly, by what name do they call these unelected councillors after May?
Jim McMahon
We need to be clear that the members who will discharge the functions of the council and the executive have been elected. The idea that they are not elected is not accurate, and we need to be careful about the language that we use. I believe—I am sure the hon. Member believes—that most councillors are good public servants and go into local government for the right reasons to represent their community, and we should not be targeting them unnecessarily. To be clear, they were elected, and we might take the view that, if they meet the criteria, their period of office should be extended to allow election to a new shadow unitary authority. On that basis, I hope that local people will support it.
Steve Race (Exeter) (Lab)
I thank the Minister for the level of engagement that he has given both me and my colleagues on this process since the English devolution White Paper was published. He will know that I have a high level of enthusiasm for local communities being given the ability to take more control of services in their area. Does he agree that devolution and reorganisation offers cities such as Exeter, Lincoln and elsewhere—the key economic drivers of this country—the opportunity to grow and invest sustainably in partnership with strategic authorities? Can he shed a bit more light on the process when a county council and a district council potentially disagree on the way forward?
Jim McMahon
It is quite usual for a county council and a district council to disagree on the way forward. From a Government point of view, we will consider proposals on an equal basis wherever they have come from—from a county council, a district council or a unitary authority that might change its boundaries. It is important that that is clear, because we want to make sure that, in the end, it is the right deal for local people, it is the right deal for taxpayers and it delivers good public services.
Alison Bennett (Mid Sussex) (LD)
I refer the House to my entry in the Register of Members’ Financial Interests.
How will the Minister avoid a fire sale of district and borough council assets once they are merged with county councils, which are crippled by the soaring cost of adult social care? Does he therefore agree with me that 2028 is too late?
Jim McMahon
We can only go as fast as the process allows. We can start the process early, and we have done that. We can give clarity early, and we are doing that. What we cannot do is to shortcut a legal process that requires adequate consultation, the development of proposals and a transfer of workforce and assets to a new unitary council. That must be done in the right way, which takes time. We absolutely understand the point about local community assets, which is why community asset protection and the community right to buy are so central to our agenda going forward.
Adam Jogee (Newcastle-under-Lyme) (Lab)
The Minister will recall, I hope, the concerns that I outlined the last time he was before the House. Efficiencies, as he put it, and improved services are of course important, but so too are local identities and existing communities. With that in mind—I have asked him this before—how will we ensure that local identities are protected? Will he meet me to discuss the impact that these proposals might have on the ancient and loyal borough of Newcastle-under-Lyme?
Jim McMahon
The point that my hon. Friend makes about balancing identity is as much about culture and approach as it is about where boundaries for councils are drawn. Sometimes, the identity of a council will match closely with the identity of a place, but often it does not. In urban, rural or coastal areas, many communities are far more nuanced or localised, and there can be some quite tense local neighbourhood disputes as a result. Any reorganisation has to respect the historic locally felt identity of every part of the new area, not just the area in which its headquarters might be based or that its council might be named after, and holding firm on that has to be part of the approach.
James Wild (North West Norfolk) (Con)
The Government’s timetable is wholly inadequate. Given that the previous deal that Norfolk negotiated was scrapped without any consultation, how will the public be consulted on any changes going forward, and does the Minister accept that a minimum population of half a million may not be appropriate in rural areas, to avoid councils being very remote from the people they serve?
Jim McMahon
We tackled that head on in the White Paper, which said that, for efficiency, the minimum population will be 500,000, but was clear in the same paragraph that—this is where devolution goes hand in hand with reorganisation—there needs to be some flexibility for the reasons that the hon. Member set out. That is our firm commitment.
Mike Martin (Tunbridge Wells) (LD)
Kent county council has opted to go on the priority programme and cancel elections this May; I guess turkeys do not vote for Christmas. The timetable going forward is a little confused. We will have mayorals in 2027, unitaries in 2028, and then it stands up later on. Could the Minister give some more detail on that? If the process is stretched out like that, Conservative Kent county councillors will be in power for seven years. Judging by my inbox, the people of Kent are absolutely appalled by that. I would be grateful for more details.
Jim McMahon
From the Government’s point of view, acting in a legal, quasi-judicial way, we have to take such decisions on the value of the evidence and the proposals. It is not our job to get involved in the politics of whether the Liberal Democrats want to see the back of the Tories but the Tories want to avoid an election, or vice versa. It is our job to play with a straight bat, and look at the benefits of the proposals. Kent has applied, but we are going through the process of screening applications to ensure that they are realistic proposals for devolution and LGR that hold together. If they meet those criteria, we will support them. If they do not, we will not.
Mr Mark Francois (Rayleigh and Wickford) (Con)
Despite what senior county councillors are telling Ministers, there is absolutely no clamour in Essex for devolution—quite the reverse. Nor do the public support the Government’s proposal to cancel the local elections; that is anti-democratic. If the Government do press ahead, why do we not take the opportunity to have a county-wide referendum in Essex to see whether the public—the council tax payers—really support this? They can vote for massive change or to remain as they are. If there is such a referendum—I never thought these words would pass my lips—I will gladly vote remain.
Jim McMahon
I think the right hon. Member is getting at the fact that there will be a range of views on this issue, but it is the Government’s job to give direction, and we believe that efficiencies can be drawn out. When asked, I think local people would say that they would much rather that local neighbourhood services are maintained and grown, rather than bear the overhead costs of organisations that exist for the sake of it. It is for the consultation, and the proposals, to draw out the best outcome in the process.
Caroline Voaden (South Devon) (LD)
I welcome the theory of simplifying local government, but I am concerned about the pace at which the Government are trying to move. Devon has a very complicated landscape, with Labour-run cities, a Conservative-run county and many Liberal Democrat districts. Conflicting proposals have already been submitted to the Government by the districts and the county, so can the Minister explain how the Government will adjudicate between those conflicting proposals and decide which one will come out on top?
Jim McMahon
We will see what comes forward from local areas. In some areas, there may well be a general consensus on the number of unitary authorities, but varying views on the boundary lines. In other areas, we can perhaps expect there to be entire disagreement on both the number of councils that should follow from the proposals and the boundaries that would be drawn as a result. At this stage, all we can say is let us see what comes forward. We will try to make the right decision by balancing identity, efficiency and the relationship to devolution going forward.
Neil O’Brien (Harborough, Oadby and Wigston) (Con)
We already knew that the Government wanted to abolish our local district and borough councils in Leicestershire without consulting local people. We now know that the proposal will involve a significant expansion of the boundaries of the city of Leicester—something demanded by the Mayor of Leicester that would lead to significantly higher council tax for my residents. Within days, thousands of local people have signed a petition started by me and other local MPs who are against the proposal, including my hon. Friend the Member for Rutland and Stamford (Alicia Kearns), who cannot be here today. My local districts and boroughs are against it, so will the Government at least agree to hold a local referendum in Leicestershire before imposing this proposal from London that local people do not want?
Jim McMahon
A theme is developing of campaigning for elections to bodies that some wish will not exist in the future—that sounds familiar—and for referendums being the answer to some of this. It is about local leaders showing leadership. I understand completely that there are different views, but I am impressed by the leadership being shown by Labour, the Conservatives, the Liberal Democrats and others, because local leaders believe in their place and want the best outcome for it. I will leave the local politics to them. It is our job to ensure that we assess the proposals that come forward on a fair basis.
Monica Harding (Esher and Walton) (LD)
My constituents are well served by the fiscal stewardship of their district council of Elmbridge, and are rightly concerned that they will be forced to take on the debt of neighbouring councils such as Woking. Equally, they are looking forward to the May elections, and kicking Conservative Surrey out. Does the Minister not agree that leaders taking devolution forward should have a democratic mandate, and will he reassure my constituents that any unitary moves will be paused until the question of debt is sorted out?
Jim McMahon
We certainly accept, particularly in the case of Woking, where the debt is significant, standing at over £2 billion, that the question of debt has to be addressed through the process, but it is for the process to address it. We cannot say up front how we will treat debt in different areas, because every area is different. I do not think that any Member would expect us to do that.
Joe Robertson (Isle of Wight East) (Con)
I draw attention to my entry in the Register of Members’ Financial Interests.
Residents of the Isle of Wight are expecting full elections this May. The no-overall-control unitary authority has asked the Government to be part of a priority devolution deal with Hampshire, but not local authority reorganisation, which is not on the table. We are not being asked to do that because we are already a unitary. Does the Minister agree, therefore, that there is no good reason to delay elections when the Isle of Wight council’s future and viability is not under discussion? That is an accepted point. Why should a democracy have to have elections when the council will continue?
Sarah Dyke (Glastonbury and Somerton) (LD)
Somerset, Dorset and Wiltshire are working together collaboratively on the Heart of Wessex devolution deal and hope to be on the devolution priority programme, but there is still some uncertainty over what decision Bournemouth, Christchurch and Poole will make. Can the Minister confirm that the decision to include the Wessex proposal will not be held back, depending on the BCP decision?
Jim McMahon
We have to stick to the principles of the White Paper, because that informs the legislation that will come later this year. We are very clear in the criteria that we will not, and cannot, agree to any devolution proposals that create orphans that cannot be resolved. We expect that local leaders will come together and do what is right, given the geography of their place, to deliver devolution as soon as possible.
Max Wilkinson (Cheltenham) (LD)
Cheltenham has had a voice since Victoria was on the throne, and we need to be reassured by the Minister that we will retain that voice as part of any devolution and local government reorganisation. Otherwise, power will simply be taken away from my community and given either to Gloucester or as far away as Bristol, with a new regional mayor. Can the Minister reassure me that localism will be part of his agenda too?
Jim McMahon
The hon. Member makes a fair point. We are clear in the White Paper that we want to see devolution rolled out at an ambitious pace. We are doing that, and are pleased with the responses that we have had. We want to see local government reorganisation because we believe that efficiencies can be drawn out and reinvested back into frontline services that people see, feel and value. We also accept that that cannot be at the cost of local people feeling connected and empowered in the places where they live. Local empowerment and powers for the local community are central to the White Paper, and to our agenda going forward.
Tom Gordon (Harrogate and Knaresborough) (LD)
My constituents in Harrogate and Knaresborough recently underwent local government reorganisation. As part of that, the North Yorkshire (Structural Changes) Order 2022 granted five years to develop a new North Yorkshire council-wide local plan. Work on local district plans halted to prioritise that new plan, which has now been compromised by the introduction of new housing targets under the national planning policy framework.
Will councils undergoing new rounds of local government reorganisation receive transitional arrangements, or will they fall into the same trap as Harrogate and Knaresborough and North Yorkshire, where speculative planning applications will see endless concreting over the green belt and issues with getting housing where we actually need it, rather than where we want it? Will the Minister meet me to discuss the legacy issues of that local government reorganisation, and outline what lessons have been learned from previous reorganisations?
Jim McMahon
The hon. Member is conflating two separate issues. One is the process of reorganisation, and his area of Harrogate has been through that process, including the postponement of elections to facilitate it. On housing development, if he wants to stop speculative development and to have control of what is built in local communities in Harrogate, the best way to achieve that is to have a plan in place where developers can be held to account.
Martin Wrigley (Newton Abbot) (LD)
I draw attention to my entry in the Register of Members’ Financial Interests.
Talking of localism, district councils provided a useful amount of local accountability. How will the Minister ensure that local accountability continues when the regional identity may be different? May I also ask about the future of towns and parishes, which are not mentioned at all, and neither are national park authorities? How will those be empowered to have more local responsibility?
Jim McMahon
The White Paper was directive on this issue. I can only assume the hon. Gentleman has not read it, or he got bored and gave up halfway through—I will leave him to answer that. Over quite a long period of time, councillors have been relegated to the back benches if they are not in the cabinet, and we do not believe that is right going forward. We want local councillors to be frontline councillors, community conveyors, leading in their local communities and getting things done. However we marshal the system—regardless of the size of the council, where it is, whether it is a unitary council in a met area or a reorganised council in a shire county—localism has to be at its heart.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his answers to this urgent question. He is outlining a clear policy and strategy for the way forward, and we welcome that. The papers today are full of calls for debt cancellations for English councils, which do not provide much relief to those councils that have sought to stretch moneys and resources to make ends meet, rather than ramping up debt with vanity projects. How can the Minister ensure that reorganisation assists councils to prioritise people over policy?
Jim McMahon
I thought I was going to get a request to reorganise Newtownards—I have got enough on my plate with England! The point the hon. Gentleman makes about the treatment of debt is important, and we understand there are pressures. In most places, the treatment of accrued debt is manageable within the geography, but we accept there are outliers—Woking and Thurrock have been mentioned—where the debt that has been built up is significant and that we need to take a view on that. We are not at that stage yet until we see what proposal will be developed further.
Steff Aquarone (North Norfolk) (LD)
I refer the House to my entry in the Register of Members’ Financial Interests. There is a strong case for devolution in Norfolk. However, can the Minister confirm that holding elections in May does not prevent devolution for Norfolk, and would he agree that Norfolk’s voters should be allowed to have their say on who is taking forward our devolution negotiations?
Jim McMahon
We need to separate out that the devolution priority programme is one stream and the local government reorganisation programme is another. We are trying to bring those streams alongside each other, recognising that they are to a degree separate processes, so that at key points in the decision-making process, they come together to ensure transparency and clarity and so people know what timetable we are working to. I accept to a point that they can be decoupled, but the two are linked. If we are going to reorganise and move towards mayoral combined authorities, we have to bring them in line to ensure that it is a programme that makes sense in the round.
Alex Brewer (North East Hampshire) (LD)
People in North East Hampshire have told me loud and clear that they want their democratic right to vote in May. Given that councillors up for re-election were elected in May 2021, does the Minister think they still have a mandate to make decisions for their local communities?
Jim McMahon
If we decide to postpone the elections based on a credible plan that moves devolution and reorganisation along, the councillors who have their terms extended are legitimate and have the powers and rights of any other councillor. As I have said, we need to be careful that we do not undermine the democratic process by trying to portray councillors who believe in their communities and who by and large are doing a good job, regardless of party politics, as somehow not there by right. They have been elected; it just so happens that in some places their term will be extended by a short period.
Dr Al Pinkerton (Surrey Heath) (LD)
Residents in Surrey Heath face the prospect of cancelled elections, forced unitarisation and then forced amalgamation into a new western Surrey unitary authority, if the leader of Surrey county council gets his way. That western unitary authority would inherit £5 billion of debt. I am sure the Minister will agree that in seeking a new sense of identity for west surrey, a shared sense of bankruptcy was not what we were looking for, but that is the prospect we face. What would the Minister say to my residents, who played no part in accumulating that debt but who may in the future play a part in paying it off?
Jim McMahon
We have covered the hon. Member’s point about debt. Perhaps he has scars from coalitions of the past, but I suggest that now is a time to come together and put party interests to one side.
Non-Domestic Rating (Multipliers and Private Schools) Bill
Jim McMahon ExcerptsWednesday 15th January 2025
(1 month, 1 week ago)
Commons ChamberRead Full debate Non-Domestic Rating (Multipliers and Private Schools) Bill 2024-26 View all Non-Domestic Rating (Multipliers and Private Schools) Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 15 January 2025 - (15 Jan 2025)
David Simmonds
Having served as a governor in three different state schools during my local government career, I know that many state schools have facilities that they are very happy to share—some have swimming pools, some have libraries, some have adult education facilities. The sharing of facilities among schools of all kinds is normal, but the Bill introduces additional pressure that will take away access to those facilities. Isolated communities in particular, which benefit most from that access, risk losing it.
The basic fact that schools will end up net worse off demonstrates that, contrary to what has been said, this policy fails the basic test of equity and efficiency. It harms some people in our country, with no corresponding benefit to anybody else. Let me address the argument proposed by a number of Members that the consequences are marginal. We heard a lot of evidence from different people. The hon. Member for Erewash (Adam Thompson) referred to an academic who has built a career writing tracts attacking the private education sector. That is not somebody I consider to be an expert. I will take the word of mums and dads, the Independent Schools Council, institutions that represent people across our country and the House of Commons Library over the word of a single left-wing academic.
The hon. Member for Wolverhampton North East (Mrs Brackenridge) said, “It’s not fair because schools in the state sector pay business rates.” She may not be aware that there is already an 80% mandatory business rate relief for voluntary aided, foundation and academy schools, and 100% of all state school business rates liability is paid for by central Government anyway, so no school budget is burdened by the cost of business rates, whereas the consequence of the Bill will be that every independent school is burdened by those costs.
Many of us in this Chamber will see the added value that independent education brings. Many of those experts whose opinion we value have spoken profoundly about the fact that so much of our special educational needs provision is in the private sector. I made reference in Committee to Gesher school in my constituency. I defy any Labour Member visiting Gesher to come away saying, “That is a private business that deserves to be taxed.” Such institutions have emerged—in many cases over a long time—to cater to very specific and profound special educational needs and disabilities, and they are looking aghast at the consequences of the Bill.
There are a number of reasons for that, some of which are technical. The Government’s solution is to introduce the “wholly or mainly” provision. Schools that wholly or mainly provide places for children with an education, health and care plan—by which the Government mean 50% or more—will be exempt from the provisions. The problem with that policy is that many children who have well-established, diagnosed special educational needs and disabilities do not have an education, health and care plan.
Indeed, beneath statementing, which was the term at the time, the previous Labour Government introduced a number of tiers: school action and school action plus. Children with moderate to severe special educational needs and disabilities could fall into those categories and be supported in a mainstream setting. The statementing and education, health and care plan process was only ever intended to make provision for children with the most significant and severe needs. That is already the case across the state sector. We know from the evidence of many parents up and down the land that they found provision in local independent schools, and at their own cost, for children who had not qualified or had not yet achieved an education, health and care plan. It is very clear that the Government’s solution underestimates, and falls well short of accounting for, the number of children with special educational needs and disabilities. This is a Government whose Secretary of State for Education stood at the Dispatch Box last week and talked about how much they believe in inclusion. Well, their actions in support of this Bill say otherwise.
The Bill also fails to address the needs of parents who wish to secure a place for their child at a school that has a special character. This is particularly important in rural areas, but it is an issue across the country. We all know that there are schools that have the ability to provide specialist training or coaching in a sport that a child excels in and wishes to pursue, and there are schools that have a faith or cultural identity that is incredibly important to the family.
By requiring all those types of school to pay these significantly hiked taxes, this Government are bearing down on choice in the education sector and pushing up costs for mums and dads. These are not wealthy families, but ordinary people in this country who are seeking to do the best for their child and who, in some cases, are willing to take on the responsibility of paying for their child’s education even if they could still pursue the opportunity of an education, health and care plan for them through the state system. They choose to do the right thing by their child, and this Government will be penalising them.
The amendments we have tabled seek to address the shortcomings I have described as best we can. We will also support some of the amendments tabled by other parties where they clearly fulfil our shared objectives, but as the speeches and other contributions to this debate by Conservative Members have shown, there could have been so many more amendments seeking to get this Bill right.
In conclusion, all of the hereditaments that are covered by this Bill are important to our economy and to growth, and in many cases they are vital to our communities. Since the Chancellor’s Budget, growth has flatlined, inflation has revived, borrowing costs are rising and employment opportunities are diminishing. It is not too late for this Government to choose a different path, and we invite them to do so this afternoon.
The Minister for Local Government and English Devolution (Jim McMahon)
Before I speak to the amendments tabled by the hon. Members for Mid Dorset and North Poole (Vikki Slade), for Ruislip, Northwood and Pinner (David Simmonds) and for St Albans (Daisy Cooper), I thank Members from across the Chamber for their contributions and for the constructive spirit, by and large, in which they have engaged with the Bill since its introduction. Although they are not always seen, with evidence sessions and Committee stages not always being prime-time TV viewing—it is a curse, but that is the way it is—those deliberations are nevertheless essential. The contributions that were made by Members from all parts of the House in probing and scrutinising the Bill were valuable, and I hope that all Members found them interesting.
I will begin by speaking to the amendments concerning the impact of the new multipliers. New clause 1, tabled by the hon. Member for Mid Dorset and North Poole, would require the Secretary of State to review the impact of clauses 1 to 4 on businesses, high streets and economic growth within six months of those clauses coming into effect. The hon. Members for Ruislip, Northwood and Pinner and for St Albans have proposed two other new clauses. New clauses 2 and 3 would seek to impose in legislation a requirement for an analysis of the impact of the new business rate multipliers at varying points ahead of, or following, implementation of the Bill. New clause 3 also seeks to require an assessment of how the application of the new multipliers would differ between retail, hospitality and leisure businesses occupying different numbers of properties, and to compare that assessment with the impact of retail, hospitality and leisure relief from the 2020-21 financial year to the 2025-26 financial year.
We agree in principle with the points that hon. Members have raised through their new clauses. It is right that the Government consider the effects of their policies on businesses, on the high street and on economic growth, and indeed within different sectors. It is the policy of the Government that those businesses should feel a material benefit as a direct result of these measures, so let me set out how we propose to do that.
It states in the Bill that the two new retail, hospitality and leisure multipliers may not be set at more than 20p in the pound lower than the small business multiplier. The Bill also places appropriate restrictions on the higher multiplier: when it is set, it cannot be more than 10p in the pound above the standard multiplier, and cannot be applied to properties with a rateable value of less than £500,000. It is important to state that those are not the intended tax rates, but the maximum parameters to be introduced through the new business rate multipliers. As we explained during the Bill’s passage through the House, the actual tax rates will be set at the 2025 Budget, taking into account the effects of the 2026 business rate revaluation, as well as the broader economic and fiscal context at that time.
Daisy Cooper
The Minister has been here throughout the debate, and he will have heard a number of my interventions. I accept his point that those figures will not be published until Budget 2025. May I ask if he is in a position to give a cast-iron guarantee that small independents, with a small number of hereditaments, will not be subsidising organisations that have many, such as the big chains?
Jim McMahon
I did hear the hon. Lady, and I think we all accept the principle of needing to target or get support to those important small businesses, which we can all identify in our constituencies. With respect, I think there was a degree of conflation with the temporary reliefs brought in during covid, which the previous Government did not account for, that were always going to come to an end.
Our challenge was how to reconcile ongoing support for the high street with a permanent relief in law so that businesses know exactly where they are and can plan ahead with certainty. The choice we made was far fairer: to target higher-value properties of more than £500,000, which are generally—but, I accept, not entirely—the large-footprint warehouse and distribution premises used by the big online retailers.
The shadow Minister used the example of the stationery provider in my constituency. It is an online retailer, so it ought to be paying more. Why? Because for a long time—and we have all heard this from our constituents and industry—we have needed a rebalancing from online to on-street and from out-of-town to in-town, and that is exactly what this targeting does. It was never intended to be a continuation of the relief that was only temporary during covid. It is about rebuilding the foundations, and that is exactly what we have set out to do.
Daisy Cooper
I completely accept that point, and I am very sympathetic to the fact that the Minister inherited a sticking-plaster system from the previous Government. If during the course of this year his Government’s own analysis proves what I have discovered from the House of Commons Library research, will he ensure that the Government at least do not rule out introducing a new small business relief in a targeted way to support such small independent businesses?
Jim McMahon
As with all tax policies, we will keep this under review, and I say that in a very general sense. We absolutely believe that the businesses that are the backbone of our high streets, town centres and communities would, were it not for these measures, go bust. They would not be viable and they would feel the heat very quickly. However, because of the measures we are taking, businesses will be able to plan with certainty for the future, knowing that they have a Government acting in partnership with them in that enterprise.
David Simmonds
I appreciate the Minister’s point, but clearly no Parliament binds its successors, so every Parliament must make its own decisions. A lot of Members have asked about small business rate relief. It would be helpful to have some certainty from the Dispatch Box about the Government’s intentions on that. Can he give us that certainty tonight?
Jim McMahon
I can certainly give the certainty that we are providing in law for a permanent relief for retail, hospitality and leisure businesses, and we will fund that through a very targeted additional payment for properties of more than £500,000, which will primarily be the online retailers occupying big warehouses and distribution centres. It is a promise to shift from the online to the on-street, as I talked about.
Before we move on to vote on the amendment, I will make some progress. The House will know that tax policy and legislation are not subject to the same requirement for the impact assessments that accompany non-fiscal policy decisions. Nevertheless, the Treasury is committed to publishing an analysis of the effects of any multipliers at Budget 2025, which we hope will go some way to reassuring hon. Members that we will be considering the impacts of this policy carefully before the new rates are set.
The Government will continue to keep the policy and its effects under review as a matter of course, because we believe it is good practice to do that for all taxes. However, we want to make it clear to hon. Members that the Government have heard them, and we understand the importance of robustly understanding tax changes, which is something to which we have already committed. I hope this commitment to understanding the effects of the new tax rate when it is introduced will enable hon. Members not to press their proposed new clauses.
Amendment 9 would give local authorities discretion over whether the higher multipliers enabled by the Bill should be applied. The Bill would enable the Treasury, through regulations, to introduce permanently lower multipliers for qualifying retail, hospitality and leisure properties, and to fund this by introducing higher multipliers for properties with a rateable value of £500,000 or more. As we explained in Committee, we do not have any plans to narrow the scope of the higher multipliers as doing so would reduce the funding available for the very targeted support for lower multipliers for uses that everyone in the Chamber supports.
That does not mean that local authorities will be unable to apply local discretion to rate bills. As was set out in contributions, local authorities already have wide-ranging powers for discretionary rate relief as set out in section 47 of the Local Government Finance Act 1988 where the authority is satisfied that that would be reasonable, having regard to the interests of council tax payers. We assure the House that those discretionary powers are unaffected by the Bill and remain in place. Given that local authorities will be able to use those discretionary powers to provide relief, including for ratepayers subject to the higher multiplier, the amendment is not required. I hope that assures hon. Members.
I turn to amendments 1 to 6, which would widen the scope of the lower multipliers so that qualifying manufacturing properties would become eligible alongside retail, hospitality and leisure properties. In the Bill Committee, the hon. Member for Newton Abbot (Martin Wrigley) spoke of the vital importance of manufacturing to the British economy and of how providing them with a permanent cut to their business rates could help them to recover.
Let me reiterate the Government’s support for the manufacturing sector as a whole. It is said that Britain is a nation of shopkeepers, but it is also a nation of innovators, creators and entrepreneurs. Our manufacturing sector helps bring many of those ideas to life, and we understand its importance. But the Government must also support our high streets—the hoteliers, restaurateurs and publicans—and that is especially important with a property tax such as business rates as those sectors rely on good locations, which in the business rates system are often valuable locations. If they did not have that targeted support, they would feel the hit very strongly.
Through the Bill, we are delivering our manifesto pledge to protect valuable town centres and high streets by enabling the introduction of permanently lower taxes for qualifying retail, hospitality and leisure properties from 2026-27, ending the uncertainty of the annual retail, hospitality and leisure relief that has been rolled over year on year since the covid-19 pandemic. We have been clear throughout the process that this tax cut must be fully funded. Therefore, against the current fiscal backdrop, a widening of the scope of properties eligible for the lower multipliers might dilute the support that the Government were able to provide, or its impact might even require a higher tax rate for properties with values of more than £500,000 to fund such new multipliers. However, we respect hon. Members’ points of view and agree that our manufacturing sector should be recognised and supported.
Advanced manufacturing is one of the eight growth-driving sectors identified as part of the Government’s industrial strategy. At the autumn Budget, the Government announced £975 million for the aerospace sector over five years, over £2 billion for the automotive sector over the same period, and £520 million for the new life sciences innovative manufacturing fund. That is how the Government intend to support the innovators, creators and entrepreneurs mentioned earlier. Because we have this package in place to support manufacturing, we cannot accept the amendments, but I hope that I have been able to provide hon. Members with reassurance as to our commitment to support the sector, which I am sure the whole House recognises is vital.
I turn to amendments 7 and 8. While clause 5 will remove business rates charitable relief from private schools, the amendments would introduce new provisions or expand existing provisions in the Bill to ensure that certain private schools remain eligible for business rates charitable relief. Amendment 7 would result in a fee-paying school retaining its relief if it wholly or mainly catered for pupils with special educational needs as defined under section 20 of the Children and Families Act 2014, whether or not those pupils have an education, health and care plan. Amendment 8 would result in a private faith school or a private school with a special character maintaining its eligibility for charitable relief if there were no maintained or academy school of the same faith or special character within the statutory walking distance set out in the Education Act 1996. Although amendment 8 does not indicate what may constitute a special character, we understand from previous contributions in the House that that would include schools that follow a particular method of education. Amending the basis on which fee-paying schools are eligible to retain their charitable rates relief in the manner in which the amendment proposes would undermine the Government’s intention to remove tax breaks for private schools. As we have said, the removal of the tax break is necessary to fund school support for the over 90% of pupils who are educated in the state sector.
The Government have carefully considered their approach to minimising the impact on pupils with the most acute needs. The Bill provides that private schools that are charities and that wholly or mainly—by over 50%—provide education for pupils with an education, health and care plan will remain eligible for charitable relief. As hon. Members will be aware, most children with special educational needs, with or without an EHCP, have their needs met in mainstream state-funded schools. If an EHCP assessment concludes that a child can only be supported in a private school, the local authority directly funds that place.
Where an EHCP has not named a private school, the parents or carers of the child may choose to place that child in a private school, but that is a choice made by the parents and does not detract from the assessment that the pupil’s needs can be catered for in the mainstream state-funded sector. In instances where a child’s parents disagree with the local authority’s assessment that their needs can be met in the state sector, the EHCP system is the most appropriate channel to resolve such disagreements.
The Government are aware of the concerns raised by hon. Members and others that pupils with special educational needs in private schools may lose their charitable relief. The Government believe that most private special schools will not be affected at all by the Bill. In fact, we expect any private special schools losing eligibility for private relief to be the exception; according to our assessment, they could be in the single figures. It is important that we keep it in that context.
Jim McMahon
I do not have time for any more interventions.
Private schools that benefit from the existing rates exemption for properties that are wholly used for the training or welfare of disabled people will continue to do so. The majority of children in England with special educational needs, with or without an EHCP, have their needs met in the state sector already. The Government’s ambition is for all children and young people with special educational needs or a disability to receive the right support to succeed in their education as they move into adult life.
As Members know, all schools are required to follow the Equality Act 2010, which includes fostering and promoting an environment that encourages respect and tolerance of children and families of all faiths and of none. We have listened carefully to arguments relating to exempting faith schools from the Bill, and we have decided that a carve-out for faith schools or schools with other special characteristics cannot be justified. For those reasons, we are unable to accept amendment 8.
Finally, amendment 10 would delay the removal of charitable rates relief from private schools by one year to April 2026. To eliminate barriers to opportunity, we need to concentrate on the broader picture of the state sector, where most children are educated. Ending the tax breaks on VAT and business rates for private schools is a tough but, in the end, necessary decision that will secure additional funding to help deliver on the Government’s commitments to education and young people. Together, these policies are expected to raise over £1.8 billion a year by 2029-30—essential funding to improve the education of the vast majority of school-age children. Delaying their implementation would forgo about £140 million, which, frankly, cannot be justified.
The House has heard a good range of amendments to the Bill, and I hope that I have been able to address them all. Although we are not able to accept the amendments, I hope that the assurances that I have outlined are accepted and Members feel able to withdraw them. If not, the Government cannot support them.
Question put, That the clause be read a Second time.
Jim McMahon
I beg to move, That the Bill be now read the Third time.
I take this opportunity to acknowledge all who have contributed to the Bill’s passage through this House, particularly my private office team, for the support that they have offered during this process, officials in my Department, for the outstanding work that they have done, and colleagues in the Department for Education and the Treasury, as well as Clerks of the House, for supporting the process of this Bill.
The Bill honours the Government’s manifesto pledge to end business rates charitable rate relief for private schools in England and to fundamentally reform the business rates system. We are kickstarting this endeavour through the introduction of lower tax rates for retail, hospitality, and leisure properties.
I thank all Members who contributed to the evidence sessions, the Committee stage and today’s debate. I hope, even though there were disagreements on parts of the new clauses and on the amendments, that there is at least an acknowledgment that we have gone a long way to ensure that we get to the heart of what this Bill is intended to do when it comes to the high street and our town centres. In the end, whatever the differences—and let us be honest there are plenty—we all know how important our small businesses are to the viability of our high streets. We all recognise that these are more than just places in which to do business; they are places that people look to as the heart of their community. They are always more than the sum of their parts. Hopefully, Members will see that these measures will really make a dent in this area.
I also place on the record our thanks to those who gave evidence to the Public Bill Committee, including: the Institute of Revenues, Rating and Valuation; the British Retail Consortium; the Co-op Group; M&S; the Shopkeepers’ Campaign; the British Property Federation; and the Independent Schools Council. They have enabled us to scrutinise the Bill properly and to get evidence from professionals who understand what things are like on the ground, and that, I believe, added value to the process.
I thank those who attended and gave evidence in Committee for their time and willingness to share their expertise. I also wish to extend my thanks to hon. Members who attended the Public Bill Committee to ask questions, to foster debate, and to contribute to discussions as we take these important first steps to transform the business rates system.
The Bill will help to secure additional funding to enable the Government to deliver their commitments to the majority of children who attend state schools, which is the second part of this Bill. Ending tax breaks for private schools is a tough but necessary decision. It will come as welcome news to most parents in England, as it represents the Government’s determination to break down the barriers to opportunity and ensure that all children get a high-quality education. Let us be absolutely clear: more than 90% of children in this country go to state schools and they deserve the best, too. Now they are going to get it.
Let me assure Members that the education system in England is prepared for the relatively small number of pupils who may move as a result of the measures in this Bill. Much of what we have heard about churn in the system is not supported by the evidence and, in the end, it runs the risk of scaremongering. We need to reflect on the fact that there has always been change in the system, even before these measures were introduced. Importantly, we are organising to make sure that parents and pupils receive support if they need it, but we believe that will be around the edges.
The Bill will also provide certainty to high streets by making provision to introduce a permanent tax cut for retail, hospitality and leisure properties. We have heard a lot about the change from the covid relief to the permanent, baked-in relief that we are providing through the Bill. The Opposition have said a number of times during the Bill’s passage that it represents a reduction, but a degree of honesty is required. The Opposition know, as do we, that there was no provision—not a single pound or penny—for the continuation of the temporary relief provided during covid on which retailers, hospitality providers and leisure providers were relying.
The Opposition know that that is a fact, as do we. The only difference is that while the Opposition were willing to political point score, while businesses were waiting for maturity and for an answer to the problem, we were getting on with the job of government, and providing the permanent support that businesses need. How will we pay for it? We have heard the Opposition say a lot that they do not support measures, but they always support the investment. They support the investment in state schools, but not the measures to generate the income. They support the measures to support high streets, but seem not to support the measures to ensure that premises with a value of £500,000 or more pay more into the pot.
The reality is that this has not just come out of the blue. The Conservatives had 14 years to address the imbalance from the online to the on-street, from the out-of-town to the in-town, and they did nothing, so it is, frankly, ridiculous for them to try to present themselves during the passage of the Bill as the champions of enterprise, of our town centres and of small businesses. They now have an opportunity. We have sorted out the amendments—they were nonsense, and most people would accept that—but on Third Reading we get to vote on the substance of the Bill. The Opposition could do the right thing. They could change course and back support for state schools to get them the money that they need. They could back measures to get money to the high street in our town centres and do the right thing. Now is the time to show that they will be the mature Opposition that they promised to be, but I expect that that will not be the path they choose. Luckily, the Government are getting on with the job. I commend the Bill to the House.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Draft Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025
Jim McMahon Excerpts(1 month, 2 weeks ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I beg to move,
That the Committee has considered the draft Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025.
It is a pleasure to serve under your chairmanship, Mr Twigg. The draft regulations were laid before the House on 19 November 2024. They have three elements: first, the conferral of borrowing powers on the York and North Yorkshire combined authority, the North East mayoral combined authority and the East Midlands combined county authority; secondly, the conferral of the general power of competence for economic development and regeneration on the East Midlands combined county authority; and thirdly, the amending of certain parts of the East Midlands Combined County Authority Regulations 2024.
I will come to each of those elements in turn, but, put simply, the regulations will extend the borrowing powers of the York and North Yorkshire and North East combined authorities to apply to all their functions, and enable the East Midlands combined county authority to borrow against its functions; confer on the East Midlands combined county authority its constituent councils’ general power of competence for economic development and regeneration; and make amendments to the East Midlands Combined County Authority Regulations 2024 to address typographical errors and additional operational requirements that were identified after those regulations were made.
If approved by the House, the draft regulations will implement a commitment made to the three authorities in their original respective devolution deals. The regulations will match the Government’s ambition for English devolution by moving power out of Westminster and back to those who know their areas best. The extension and conferral of borrowing powers via the regulations is an important step towards empowering the authorities to invest in their local areas, giving mayors and local leaders the tools needed to stimulate their local economies and drive growth.
Currently, in line with primary legislation, the York and North Yorkshire combined authority can borrow in relation to its transport, police and fire functions, and the North East mayoral combined authority can borrow against its transport functions. As a combined county authority, the East Midlands is unable to borrow against any of its functions. The regulations will allow all three authorities to borrow against any of their functions, thereby delivering on commitments made in their respective devolution deals. The three authorities and their respective constituent councils—13 in total—have consented to the regulations.
The conferral of borrowing powers will bring the York and North Yorkshire combined authority, the East Midlands combined county authority and the North East mayoral combined authority in line with their existing combined authority peers, which have followed the same process for the conferral of borrowing functions. Additionally, it will bring the three authorities in line with local authorities, which are empowered to borrow for all their functions.
As combined authorities and combined county authorities, the York and North Yorkshire, East Midlands and North East authorities are subject to requirements for borrowing provided for in the Local Government Act 2003. The prudential borrowing regime provides that an authority can borrow lawfully only if it can demonstrate that the servicing and repayment of its debts is affordable. This ensures that the three authorities’ proposed borrowing powers will be used appropriately.
Like other areas, York and North Yorkshire, the East Midlands and the North East, as combined and combined county authorities, have a further check on their ability to borrow. Such authorities are subject to a debt cap, which must be agreed with His Majesty’s Treasury. Each agreed debt cap specifies the ceiling of the authority’s debt. I can confirm that all three authorities have successfully agreed their respective debt caps for the 2024-25 financial year, and negotiations on debt caps for the 2025-26 financial year are due to start shortly.
The regulations also confer on the East Midlands combined county authority its constituent councils’ general power of competence. This power will be used only in relation to economic development and regeneration. The conferral of the power fulfils commitments that were made as part of the original east midlands devolution deal, which was agreed with all the constituent councils, and will enable the East Midlands combined county authority to support local businesses and grow the visitor economy. This was a fundamental element of the proposal submitted by the constituent councils—Derby city council, Derbyshire county council, Nottingham city council and Nottinghamshire county council—to establish the East Midlands combined county authority.
The councils’ proposal makes reference to how the combined county authority will ensure that workers, businesses and local areas are supported, where possible, by schemes such as the east midlands investment fund in the delivery of key aspirations in net zero and skills. The conferral of the east midlands constituent councils’ general power of competence for economic development and regeneration will ensure that the combined authority is able to achieve its aims and deliver for the people of the east midlands.
The limited conferral of the general power of competence is a new power for the East Midlands combined county authority, so the Deputy Prime Minister, in her capacity as Secretary of State for Housing, Communities and Local Government, must be satisfied that the statutory requirements outlined in the Levelling-up and Regeneration Act 2023 have been met. I can report that the necessary statutory requirements have been considered, and the Deputy Prime Minister is content that they have been met. The Deputy Prime Minister is satisfied that the conferral of the power will improve the economic, social and environmental wellbeing of those who live and work in the east midlands, is in keeping with the need to secure effective and convenient local government, and reflects the interests of local communities. An appropriate consultation on the conferral of this power has also been undertaken in the east midlands.
Economic development and regeneration featured as a core element of the devolution deal that was signed on 30 August 2022, and was consulted on during the statutory consultation with residents, businesses and stakeholders on the establishment of a mayoral combined county authority in the east midlands. The consultation ran from 14 November 2022 to 9 January 2023, with the public and local stakeholders expressing support for the economic development activities that the combined authority intends to undertake. When asked about policies relating to economic regeneration and development, 48% of responses were supportive, with 36% unsupportive and 16% having no opinion.
The use of the function, if conferred, will be subject to the provisions of the East Midlands Combined County Authority Regulations 2024, which have already been determined as securing effective and convenient local government. The combined county authority has a directly elected mayor and two members from each of its constituent councils. In the East Midlands combined county authority, decisions, including those relating to the use of the general power of competence for economic development and regeneration, are passed by a simple majority, but any such majority must include the mayor. There is an agreed mechanism for district councils to input into the combined county authority through four non-constituent members representing the views of district councils from across both two-tier areas. Other local interests are also represented through either non-constituent or associate membership of the combined county authority.
There is precedent for the conferral of a combined authority’s constituent councils’ general power of competence for economic development and regeneration. Existing combined authorities, such as the West Midlands and the Liverpool city region, already have this power, which they have utilised for the purpose of economic development in supporting businesses and tourism in their areas. The East Midlands authority will similarly make use of the power for the benefit of those who live and work in its geography.
The regulations will also make amendments to the East Midlands Combined County Authority Regulations 2024, which were made at pace to ensure that the East Midlands authority was established in time to hold its inaugural mayoral election on 2 May 2024. This was successfully achieved, not only ensuring that the mayoral election could take place but creating the first ever combined county authority. With the East Midlands combined county authority established, it has been possible to see how the legislation works in practice and, in discussion with the East Midlands authority, certain amendments to the 2024 regulations have been identified that are necessary to enable the authority to operate effectively and in line with its devolution deal, as originally intended.
The amendments to the 2024 regulations will, first, enable non-constituent members to have voting rights in East Midlands combined county authority committees, provided that those non-constituent members have been granted voting rights by the East Midlands authority’s constituent members. Secondly, they will allow the Mayor of the East Midlands combined county authority to arrange for functions to be exercised by a committee of the combined county authority. Thirdly, they will clarify voting arrangements by specifically outlining that the mayoral budget requires a two-thirds majority. This is in line with other existing combined authorities and has been included to resolve any ambiguity, as has reference to the unanimous vote required for use of transport functions.
The amendments in the regulations will also resolve a typographical error in the 2024 regulations in relation to the housing, planning and regeneration functions of the East Midlands authority. As the Committee has heard, the amendments to the 2024 regulations are of an operational nature, and will benefit the smooth running of the combined county authority by ensuring that it can function effectively and providing clarification and certainty on the use of its functions and powers. The amendments have been discussed with the East Midlands authority and its constituent councils, and both the councils and the combined authority have consented to the amendments being made.
In conclusion, the regulations, which are supported locally, will continue the Government’s mission to shift powers and money from central Government to those in our regions with skin in the game. I commend the regulations to the Committee.
Jim McMahon
I thank the shadow Minister and wish him a happy new year in return. His were generally positive comments, with the exception of the standard view of the Mayor of London, who is obviously doing a fantastic job of delivering the Government’s missions—and long may that continue.
Let me answer the shadow Minister’s questions, all of which were completely legitimate. We expect all public bodies, whether they are councils or mayoral combined authorities, to exercise their borrowing powers with the restraint that the public would expect. We expect them to borrow for a purpose and honour their borrowing commitments through the repayment schedule. That is why there is a clear mechanism in place for HMT to assess borrowing caps on an individual basis, reliant on the financial status of the local or combined authority in question. The checks and balances are robust and in place, and it may well be that the powers are not used in some places.
The point is that as we move towards a new phase of devolution there has to be an assumption of trust and autonomy for local authorities to do what is right for their local communities, without them always coming cap in hand to the Government or waiting for a new Government grant scheme that they can bid into. In the end, areas will be expected to self-organise, to work with their local business community and investors, and to marshal projects for the economic wellbeing of the country. This devolution mechanism is very much about bringing the relevant areas in line with other authorities that already have those powers.
We have seen mayoral combined authorities in particular making a difference to economic growth. Greater Manchester is significantly outperforming large parts of the economy elsewhere in England. That has been in large part because of the mayor’s convening role and the activity and energy of the local authorities, but also, importantly, because they have been able to team up and label different elements of funding to make schemes stack up and bring them to market so that they can be achieved. Having that role in place, with the legal powers required, is entirely what this mechanism is all about.
I have a different view from the Opposition on the use of a mayoral precept. The reason for that is that every mayoral operation has a cost to it. We can all agree that we want them to be slim, efficient and nimble, but the idea that some mayors have a cost to them and some do not is frankly ridiculous. Every mayoral combined authority has an operating cost. The more that authority does, the higher that cost will be, reflecting the activity that has been undertaken. There are two ways to meet that cost. We can have a levy or a charge on the local authority, which is not particularly transparent and cannot be seen by the public. The public do not even get to see on their council tax bills how much has been spent on that function, so where is the democratic accountability? Alternatively, we can shine a light on it and say that the public have a right to know how much mayoral combined authorities cost. That should be transparent on the council tax bill, and the public, through the democratic voting process, will have the right to say whether they believe that money is being used to the best effect.
Paul Holmes
I do not want to break the spirit of consensus, but although the Minister is quite right that transparency is crucial to all local mayors and that the public must know how much the authorities cost, why is it that Labour mayors seem to be raising their precept much more than any Conversative mayor? Is he saying to the Committee that Labour mayors are inefficient and their operations cost more than those of Tory mayors?
Jim McMahon
I do not want to say who has the largest number of mayors, but I do not think the shadow Minister needs me to remind him that there is only one Conservative mayor in the whole country, and in the smallest combined authority, as he knows. This is not particularly about rights and wrongs, and I suggest that it would be best not to stray towards the finances in the Tees valley.
As a point of principle in terms of democratic accountability, taxpayers have a right to know which elected official is spending money on their behalf and to be able to make a judgment about whether that money is used to best effect. Having that transparency is an important part of this democratic devolution project. I understand why the Opposition would want to make hay out of a precept and refer to it as a new tax; I would say the public are paying one way or the other and it is far better that it is transparent. I will leave that there.
This may be straying a bit too far from the SI, but we reject entirely any suggestion that devolution or reorganisation is top-down. Today, councils across England will meet to discuss whether they want to make their own submission ahead of the deadline this Friday for local government reorganisation and/or devolution. They will decide whether it is right for them. They will decide who they want to work with and whether they want reorganisation in some places, potentially with devolution with a mayoral combined authority. Some might decide that they are not in a position to join a mayoral combined authority but want to take the first step to a foundational agreement that begins that journey. That is not top-down; that is local areas working together to self-organise, and a Government who are facilitating that devolution. In the end, if we do not get power away from this place, we will not allow every part of our country to realise its full potential. Areas will always be at the behest of the Government, and that cannot stand.
Dr Luke Evans (Hinckley and Bosworth) (Con)
I declare an interest as a Leicestershire MP. Leicestershire looked at joining the East Midlands combined county authority but decided not to. Given what the Minister said about this Friday, if Leicestershire decided that it wanted to go into D2N2, would we need further legislation to change the borrowing that is set again, and a further SI to add that in, or is there a mechanism lined up so that county authorities can join mayoralties without the matter having to come back to Parliament?
Jim McMahon
I am not sure that I entirely understood the question, but this SI is about new member councils joining an existing combined authority. Any member council can join, but its membership would need to be confirmed by secondary legislation, not least because in some places functions are exercised by the local authority as a member of a combined authority, rather than by the combined authority directly. The whole thing needs to be reconciled taking into account its new membership. Leicestershire has huge economic and social potential, but without devolution it will not realise its full potential and will get left behind. I do not know whether Leicestershire is making a submission on Friday, but I sincerely hope that it will. I encourage the hon. Gentleman and other hon. Members present to speak to their local authorities and encourage submissions.
The regulations confirm the commitment made in devolution agreements with the York and North Yorkshire combined authority, the East Midlands combined county authority and the North East mayoral combined authority to provide them with borrowing powers against their functions. Providing borrowing powers will provide all three authorities with the opportunity to invest in their services and functions to the benefit of those who live and work in their geographies.
The regulations will also ensure that the East Midlands combined county authority can operate as its devolution deal intended, by conferring the east midlands constituent councils’ general power of competence for economic development and regeneration on the combined county authority, and by ensuring that amendments are made to allow the combined county authority to operate robustly and effectively. I am confident that the regulations will give the authorities the tools to shape their futures, driving growth and higher living standards across their geographies. I commend the regulations to the Committee.
Question put and agreed to.