Non-Domestic Rating (Preparation for Digital Services) Bill

Debate between Jim McMahon and Jim Cunningham

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Monday 13th May 2019 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I will not put the House through a rendition of “Happy birthday”—[Hon. Members: “Shame!”] But many happy returns.

Perhaps this is a missed opportunity. It is a shame, really, that the Bill is so narrow, because we have a good five hours where we could have talked about the real threats our businesses face, the dangers to our high streets and the many representations made on this issue. Nevertheless, this Bill is progress. Following the falling of the Local Government Finance Bill when the general election was called, we encouraged the Government to come forward with non-controversial elements of that Bill. Clause 14 was not controversial, so I am glad to see it in this Bill.

Local councils are on the frontline of government, delivering services that people rely on and which both support and enrich our communities on a day-to-day basis. Labour welcomes the modernisation of tax collection and the move to online payment and account facilities. However, the proposal to develop an online payment system led by HMRC, as set out in the Bill, does raise some questions.

Madam Deputy Speaker, I refer you to my entry in the Register of Members’ Financial Interests as a vice-president of the Local Government Association, the body that represents councils, which are the billing authorities responsible for the collection of business rates. It, like me, wants confirmation that the move to develop an online payment collection facility will not change the fundamental and historical role of local councils as billing authorities with the legal responsibility for the collection of business rates. In the design of this new bridging system, to what extent have the Government sought input and representation from local government? Local government has significant experience in designing systems and processes, and it is important to draw on that to make the best of this proposal.

As the Government are investing in digital services, do they intend to streamline this online facility with the check, challenge and appeal process already in place? That would make it easier for businesses to have an end-to-end business rate system in place, marrying in one system the payment mechanism with the ability to check and appeal business rates. What payment mechanism will be in place to transfer funds to local authorities, especially in rate retention pilots? Who will be responsible for the collection of rates, and who will underwrite funds lost through non-collection?

The most critical issue is the wider sustainability of business rates and their role in funding local public services and encouraging local economies to thrive. Local government has already seen severe cuts after nine years of brutal and devastating Tory austerity.

[Mr Jim Cunningham]

One of the reasons that there is a reaction from businesses regarding the level of business rates is that while central Government should have been responsible for funding certain services, they have shoved that on to local authorities, which have had to put that through business rates, just like the police and fire authorities’ precepts.

[Jim McMahon]

It is a matter of fact that the Government are moving towards the self-financing of local government. That is fine if a local authority can generate money through business rates and council tax in its local economy, but if, for whatever reason—usually for historical reasons—it is not able to do that, the Government do not care if councils sink or swim. That is no way to fund adult social care or children’s safeguarding services, or to make sure the homeless get the support they need either. Quite frankly, it shows a callous disregard for the role of central Government in making sure that every area gets its fair share of funding. That is a critical point.

[Mr Cunningham]

Anybody who has any experience of local government—my hon. Friend does, as do I and many others in here—knows that three or four years down the road, though they hint at looking again at business rates, Ministers will come along and tell everybody in local government, “You’re profligate, you’re spending too much, so we’ll cap you.” As I am sure he will remember, we have had all this before.

[Jim McMahon]

The hallmark of local government across parties—this is not a party point—is that people roll up their sleeves and get on with it. They do not complain; instead, they find solutions to the difficult challenges facing the community, but that is made much harder when central Government are disconnected.

Successive Secretaries of State have failed to champion local government, which is why I welcome our shadow Secretary of State having that local government background and experience and really believing in it. I hope he will be Secretary of State in the future, leading on this from the Government Benches. It is critical that the Secretary of State should not batter local government all the time. It needs a champion to celebrate what goes on in every community and, regardless of party affiliation, to fly the flag for what has been proven to be the most efficient arm of government—they are our champions, and we should thank them for all the work they do.

By 2025, there will be a funding gap in local government of £8 billion, and by 2020 local authorities will have faced core funding cuts at the hands of central Government of nearly £16 billion since 2010. That means that councils will have lost 60p for every £1 the Government previously provided to cover local public services. Next year, 168 councils will receive no funding whatever from central Government to meet the cost of rising demand for local public services.

What impact will that have? We can talk about the big numbers, and £16 billion is a huge number and has had a huge impact, but this is really about people and communities—the streets where people live, the communities that bind people together and make places decent places to live. The cuts have had a dramatic impact on government services. Youth centres have closed; libraries have reduced their hours, and hundreds have closed altogether; and meanwhile, social care is on the verge of collapse. Warning after warning has been issued, but the Government, particularly the Treasury, have not come to the table. As a result, our councils are having to make difficult and unwelcome decisions about where to make efficiency savings, and that is hampering their ability to prioritise social good above all else.

Moving to an online payment system administered by HMRC, but with links through to local billing authorities, raises a more fundamental point about taxation on business overall. Currently, many believe it operates in a silo and that the approach to business taxation is very disjointed. While our town centres and high streets are going to the wall, the online giants are making record profits and ensuring that as much as possible is sent offshore. The Government should use this opportunity not just to introduce a digital payment system, but to undertake a more fundamental review of business taxation overall to ensure that tax is generated where the wealth is created and that our town centres and communities are properly supported. We look forward to scrutinising the Bill properly and to hearing answers to the questions posed.

Local Government Finance

Debate between Jim McMahon and Jim Cunningham

Tuesday 5th February 2019 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

We have not heard a great deal today. We expected, perhaps, a rabbit to be pulled out of a hat. Word had it that the Prime Minister had a few quid to give out, but we have not seen much of that today. It could have been used in a morally just way: it could have been sent to the areas that have suffered the biggest cuts although they also suffer the most significant deprivation. Those areas have been targeted by the Government, as has been set out today in the many excellent speeches made by Labour Members in particular.

My hon. Friend the Member for Sheffield South East (Mr Betts) said that people now questioned why they were paying council tax at all, given that the neighbourhood services that they received were being reduced. My hon. Friends the Members for Liverpool, Riverside (Dame Louise Ellman), for City of Chester (Christian Matheson) and for Liverpool, West Derby (Stephen Twigg) made the same points about the human cost of removing vital public services. My right hon. Friend the Member for North Durham (Mr Jones), my hon. Friend the Member for West Ham (Lyn Brown) and my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) outlined the very real community impact of austerity and the Government’s targeting of our communities. Through to my hon. Friends the Members for Redcar (Anna Turley) and for High Peak (Ruth George), we heard story after story of the human and community cost of austerity.

What shift did we get from the Government? Absolutely none. Why? This has not happened by accident, and the Government will not suddenly wake up and realise that they have made a horrible mistake. The policy has been deliberate and targeted from day one. The Institute for Fiscal Studies said:

“In England, cuts have been much larger for poorer, more grant-dependent councils than their richer neighbours.”

Why?

“This pattern arose directly from the way central Government allocated grants.”

That was deliberate and targeted and it has not stopped today. Despite our calls and our outlining the real human cost, the policy continues.

[Mr Jim Cunningham]

If the Government were serious about helping women and bringing an end to austerity, they could have funded local authorities to give free bus passes to the women they robbed of their pensions. Surely they could have done something like that.

[Jim McMahon]

The Government have been very good at shifting money from those who need it most to areas that will secure the support of their Back Benchers. How many times today have we heard Conservative Back Benchers praising their Front Benchers and thanking them for giving in to their lobbying? So much back patting has gone on as Government Members congratulate each other on taking food off the tables of the poorest in society to shift funding to the richest.

We have heard time and again from Conservative Members how much more expensive services are in rural areas. There is no doubt that some services are more expensive to deliver in rural areas by unit cost. However, let us look at the evidence. In 2014, the Government commissioned a report that examined every single service that local authorities deliver throughout England. It showed that it is true that some, but only 15%, of services are more expensive in rural areas. In urban areas, 31% of services are more expensive, and whether areas are urban or rural has no bearing on the delivery of 50% of services. The evidence therefore shows that services are more expensive to deliver in urban areas. That is because the deprivation is ingrained and generational. It is tied to the local economies, and councils are there to try to keep it all together.

When our communities have asked for hope and direction, what have they been given? Not even warm words or an acknowledgement of the human cost. Now more than a million older people do not get the social care they would have got in 2010. Children who are at risk of violence and abuse are not given the protection they need, because the Government have walked away and said that it is nothing to do with them. It is everything to do with them. When other Departments were fighting their corner, where was the Ministry? When austerity first struck, local government was hit hardest. We have lost 800,000 members of staff from local government. We have the lowest number of staff since comparable records began, yet the central Government workforce is the largest since comparable records began. Local government has taken more of a hit than any other Department. Within local government, Labour-controlled areas have taken the hit, and that is politically motivated.

The Government had the chance to put this right today. They have failed to be fair and just, and failed the people we come into this place to serve. Shame on the lot of you.

Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Debate between Jim McMahon and Jim Cunningham

2nd reading: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 23rd April 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Happy St George’s day to you and to the rest of the House, Madam Deputy Speaker.

I thank the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Richmond (Yorks) (Rishi Sunak), for meeting me last week to go through some of the Bill’s more technical aspects, which will save other Members the headache of hearing some of them today.

The Opposition broadly welcome both of the changes in the Bill. Clause 1 seeks to address the Supreme Court’s decision on the staircase tax, relating to how unconnected units occupied by the same business are treated. The measure will put businesses in no worse position than they would have been before the court ruling. Clause 2 will give local authorities the power to increase council tax on homes that are deemed to be long-term empty.

While the Opposition support clauses 1 and 2, we need assurances from the Government that they will not cause detriment to local authority finances. That is particularly the case with clause 1, which will reinstate features of business rates valuation practice that applied prior to the Supreme Court case. The Housing, Communities and Local Government Committee has been clear that the effects of the provision on individual local authorities ought to be quantified and supported. The Government have not been clear about how individual local authorities will be affected or about those that will be picking up the tab as a result of the reforms. It has therefore been difficult to give the measures adequate scrutiny at this stage, so we hope to explore some of them in Committee.

Some wider issues also need consideration. The Federation of Small Businesses has illustrated the problems facing smaller firms that necessarily operate in large premises but do not qualify for small business rate relief. For example, childcare providers require space by the nature of their activity, but that takes them above the small business rate relief threshold. Far more also needs to be done to protect the high street, and town and city centres. Business rates are a significant cost and can be the difference between surviving or failing. We recognise that a taxation system cannot sit in isolation and must support the Government’s broader policy objectives, and we have seen some of the largest corporations get away without paying their fair share of tax while premises—the property-based businesses that are the lifeblood or foundation of many of our communities and are essential for town centres to thrive—are taxed through business rates before they earn a single penny.

Turning to clause 2, we welcome the move to bring long-term empty properties back into use by incentivising the owners of such homes to act, but we are also keen to tackle the shortage of available housing in some areas. It has been Labour policy for some time now—the Government’s policy falls short of this—to see 300% council tax charged under the measures that are being put forward today. There are currently 200,000 empty properties in England, and we have seen homelessness increase steadily over the past eight years. As we speak, 120,000 children have nowhere to call home. They are staying with friends and family, and many of them do not have a bedroom of their own. Meanwhile, the evidence of rough sleeping and homelessness is plain to see in towns and cities up and down the land. Councils, particularly in London, which has the highest concentration of empty properties, are battling to meet their statutory obligations and housing duties due to increasing demand, rising unaffordability and the effects of eight years of Government cuts to local authority revenues. It is absolutely right that owners of empty properties pay a premium if their property is suitable to let but they fail to do so. However, any move must form part of a wider strategy to bring empty homes back into use, including positive, proactive support to get homes back on the market.

We welcome the Government’s acknowledgement of some of the faults in the system and their move towards adopting Labour’s policy on empty homes, but they could of course have gone further. Housing is one of the most pressing issues facing this country, and eight in 10 people think the Government ought to do more to address the housing crisis. We know that, which is why my right hon. Friend the Member for Wentworth and Dearne (John Healey) has launched a Green Paper on affordable housing—a framework to change the country’s approach to affordable housing—as part of a new national mission to solve the country’s housing crisis. From planning to funding right through to delivery, we need a comprehensive, joined-up strategy to tackle the housing crisis.

The Conservative-chaired Local Government Association —I declare an interest as one of its vice-presidents—agrees that there is more to be done. It would like the Government to go further and give councils greater power to borrow, to build and to deliver the homes that we need—not on a case-by-case basis, but by trusting local authorities to understand their areas and to get homes built quickly.

[Mr Jim Cunningham (Coventry South) (Lab)]

Like me, my hon. Friend has experience of local government, and he will know that if the Government are serious about dealing with this country’s housing crisis, they would free local government to build social housing on a major scale. That would determine the Government’s level of commitment. So far, however, they have not shown that commitment. There are families in my constituency in Coventry who cannot get accommodation, which is a terrible situation for people to find themselves in.

[Jim McMahon]

Absolutely. In some areas, the housing crisis was a significant factor in why people voted to leave the European Union. People do not feel confident about this country’s future, and housing is a vital part of that. If people do not have the security of a home or a secure tenure, they will rightly be nervous about what the future may bring, so the Government need to do much, much more. However, the idea that they can command and control from Whitehall and expect every community to benefit has been disproven time after time. As my hon. Friend pointed out, we should empower local government to get on. Councils know their areas. They have the local partnerships and know the sites. They have planning departments that need greater support. If they were given the resources, they could do far more, but this must be about giving them independence and freedom, not making them wait for the Government to offer crumbs from the table, which is how many councils feel.

[Jim McMahon]

I accept that point, but we also need to accept that local plans are limited in that, by and large—of course they do more than this—they are about land supply to support the number of housing units that will be built. They do not discuss the mixture of tenure or go into detail about the funding plan that will support the proposals. A local authority could identify, based on its population and demographics, that it needs a certain proportion of affordable or social housing, for example, but there will be no funding plan to deliver on that. A local plan could sit on a shelf for 10 years, but if the council’s ability to borrow is curtailed, it cannot lay the bricks to build social housing. Like the hon. Gentleman, I know my local area and the council knows the area too, but it is constantly under the cosh of funding cuts. It does not have the capacity and it needs it to be freed up.

[Mr Jim Cunningham]

My hon. Friend is generous in allowing me to intervene again. If the Government really believe in local democracy and want to encourage a property-owning democracy, they should do what used to be done. Local authorities used to give out mortgages and build houses for sale, and they used to build social housing. That is how to do it if the Government really mean to tackle the problem, and that is what they are not doing.

Local Government Finance

Debate between Jim McMahon and Jim Cunningham

Wednesday 7th February 2018 Commons Chamber

[Jim McMahon]

Those figures are absolutely right. The analysis from Age UK shows that 1.2 million people who would have been entitled to social care in 2010 are no longer receiving social care because of cuts to the eligibility criteria by councils.

[Mr Jim Cunningham]

Coventry City Council has probably lost about £90 million over the past few years. The Government are playing a very clever game: they are shifting the cost of local government on to the local taxpayer, so that they can boast of keeping taxes low. It is really just a double-edged sword.

[Jim McMahon]

I agree with that. We are here debating work carried out by people outside this place—local councillors and local government workers—and it is right in this place to thank them for their hard work, their dedication and their grit and determination to make sure that services are provided in the face of severe austerity.