Birmingham City Council

Debate between Jim McMahon and Vikki Slade

Monday 31st March 2025 Commons Chamber

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I apologise, Madam Deputy Speaker—I ran all the way from the top floor of Derby Gate, but I was not fast enough. I refer the House to my entry in the Register of Members’ Financial Interests: I am an elected member of Bournemouth, Christchurch and Poole council.

The people of Birmingham have a right to receive decent services, and it is critical that the ongoing dispute is resolved as quickly as possible. Like the hon. Member for Birmingham Erdington (Paulette Hamilton), we are concerned about the impact on public health and the environment, and urge the Government to confirm that when waste collection resumes, it will be safely disposed of and recycled where possible, and not just given to the cheapest bidder.

Fundamentally, the Conservative Government slashed funding to local authorities year on year, forcing councils to do more with less and plunging so many, of all political stripes, into financial crisis. However, we are disappointed that the Government have not yet addressed some of the financial crises, particularly around confirmation of the special educational needs override, which I know councils across the nation are really worried about, and which is making it more difficult for them to make decisions about their future plans.

We welcome the multi-year settlements, which I am sure the Minister will refer to, but we remain concerned about how effective they will be. Two recent examples give us cause for concern: the roads funding, which appears to give local authorities more money, actually cuts England’s road repair budget by 5%; and the employer’s national insurance change, which promised to cover councils’ costs for direct staffing in full, did not do so in some cases, including for Bournemouth, Christchurch and Poole council. All that is underpinned by a broken council tax system that is regressive. In some areas, the council tax base is totally inadequate to provide for the growing list of services, and the Lib Dems want to see a radical overhaul.

Birmingham should serve as a lesson for the Government, because this matter is a result of the long-running equal pay crisis. What learning are they taking from the situation in Birmingham, and what extra measures is the Minister introducing to prevent public health and community safety issues?

[Jim McMahon]

I am pleased to say that we are making sure that we deal with the waste piling up in the streets and that the council gets the support it needs, but the hon. Lady is right to say that there is an interrelationship. This dispute does not sit in isolation; it is part of wider considerations on equal pay, and we have to bear in mind that the cost of meeting the equal pay liability for the people of Birmingham is £1 billion. There can be no steps forward in this dispute that double down on the inherent problems that led to the equal pay crisis that the city has faced. These are sensitive negotiations, but it is important that the council continues to negotiate and that people get around the table to find a way through.

The hon. Lady talks about the multi-year settlement that is being prepared for and the simplification of the funding mechanism, but she also mentions redistribution. Birmingham and councils like it have not found themselves in this situation in a vacuum; it has been partly driven by central Government not distributing money in a fair way to deal with service need and deprivation, and it is very important that we get the money to where that deprivation exists. Even under the current one-year settlement, Birmingham has had a 9.8% increase—in cash, that is £131 million.

Local Authorities (Changes to Years of Ordinary Elections) (England) Order 2025

Debate between Jim McMahon and Vikki Slade

Wednesday 26th March 2025 General Committees

[Jim McMahon]

We have tried to strike a balance between answering the demand—the fact that all 21 counties have submitted to the interim phase is testament to the support in the system for this—and finding enough of a framework at a national level so that areas know what to report to, while building enough flexibility to take into account that England is very different in its construct and make-up. There are huge variations between urban centres, rural communities and coastal communities. In forming local authorities that have a clear anchor that can be understood and respected by the local community, we have to allow for flexibility in that system.



The statutory invitation that went out was clear that that means population sizes of 500,000 as a starting point, but we have been clear with the County Councils Network, the Local Government Association and the District Councils’ Network, and in trade press interviews, that we will see a range. Some will say that the mid-300,000s is right for them, and we are seeing some city districts looking at moving their boundaries outwards. But others will say, “Actually, our county does not have that characteristic—we haven’t got that city anchor or coastal issue that might be present elsewhere—and we think the best option for our place is maybe 600,000 or 700,000”.

We want to be flexible enough to take into account local representations as we receive them. Our working assumption is that when all that balances out, we will end up with an average of 500,000, but who knows? We need to see the submissions that come in, but flexibility is important, and it challenges the idea that this is a top-down, mandatory system of uniform councils that all look the same, regardless of local circumstances. It is not that. It is very important nationally that we give the framework and direction—and we have done that—but this is about co-operation and partnership. I appreciate that that point has been picked up on.

We have been clear about our willingness to drive forward to deliver this vision, and to work with local councils to support communities to fix the foundation of local government in delivering that ambition. Alongside the English devolution White Paper, I wrote to all places in the 21 areas inviting them to express a clear commitment to delivering to the most ambitious timeframe, and to flag any requests for a delay in elections to take place.

Where authorities made such a request, we have judged it to meet a very high bar that was rightly set, and we have kept our commitment that clear leadership locally would have to be met with an active partner at a national level. We have taken the necessary decisions to postpone local elections where it will help to smooth the transition process and deliver the benefits of mayoral devolution, supported by strong and stable local government reorganisation as quickly as possible. We are now working with those areas to prioritise in parallel the necessary steps to explore the establishment of new mayoral authorities in time for the May 2026 mayoral elections, and to deliver plans for new unitary local government.

On devolution, public consultations are already under way, running from 17 February to 13 April in these areas. More than 12,500 responses have already been received in that process. We are getting on with delivering reorganisation as well. All district and county councillors in the two-tier areas, and their neighbouring smaller unitary authorities, were invited, and I am pleased to say that every area—comprising of councils of all political stripes—has responded to the invitation to reorganise. They shared with Government an interim plan containing updates on their thinking about options for creating new unitary councils. The response demonstrates without doubt the groundswell consensus from communities that change is overdue and needed. Earlier this week, I made a written statement setting out the details of this, providing parliamentary transparency and supporting the commitment we made to ensure there was active reporting during the course of the process.

Local engagement with Members of Parliament, public sector providers, residents and other key local partners will now be led by the councils as they develop detailed proposals to establish strong, stable unitary councils that are fit for the future. This order is essential to allow the first wave of this ambitious programme to be delivered. It grants postponements for 12 months only, and only for the nine councils whose requests met the high bar we set.

We are extremely clear that these decisions were made on the basis of local requests to free up capacity and enable the practical steps needed, which would not be feasible so quickly if the 2025 local elections went ahead in those areas, for reasons that are self-evident. These areas have demonstrated the clear and strong local leadership and the necessary ambition to drive forward the programmes to the timelines that the Government have set out to deliver for those areas, including taking the difficult decisions that are needed.

Let me address the points that have been made. I sense that a lot of the debate today has picked this process out as being unusual in English local government, but it is not. Members will know that between 2019 and 2022, 30 sets of elections were cancelled: 17 to allow preparatory work for local government reorganisation, which is what we are talking about here, and 13 as part of legislation to allow the unitarisation process to take place after the proposals had been submitted. So this is not unusual; it is a natural part of the cycle to free up capacity and enable those proposals to be developed— I can go through the list, and provide the details in writing.

But I do think we need to be careful here. First of all, we absolutely believe that this is the right thing to do, and that is not because we have an ideological view about how local government should sit. All the Members in this room are here because we care about local government and local communities, and we cannot have a hand-to-mouth funding regime where local government is just not sustainable. We have to find a solution that really fixes the foundations, and this is one small part of that—there is a lot more we need to do—but it is important. If we did everything else but not this, it would just not hold together. I think that it would devalue—I will be honest and direct about this—the work that local leaders have put into this at a local level to build consensus and show leadership. I am not talking about exclusively Labour leaders; in many areas, they are Conservative, Liberal Democrat or independent. We have a collective responsibility to at least mirror the leadership that they have shown across political parties in the interests of their communities, and to reflect that here in the national Parliament. I do not think that is too much to ask.

[Vikki Slade]

For clarification, I do not think we would object to the process or intent of reorganisation— I have been through it as a local leader, but the process was quite different. I am thinking about the suddenness and the shortness, and my concern is about consultation in advance of the decision to take this particular route. When Bournemouth, Christchurch and Poole and Dorset were merged in 2019, I think the process started in 2016, and then went through a local referendum in one place, which actually said, “No, thank you.” That went ahead anyway, but the decision was taken after a period of consultation. I ask the Minister to reflect on whether local consultation in advance of a decision to cancel an election would have been a better option, had time allowed.

[Jim McMahon]

To be clear, there is not time to do that. In the finance settlement this year, I think we have done a good job in building a bridge to the multi-year settlement, but it is only a bridge. That does not answer the fundamental, underlying questions that are leading to the financial vulnerabilities of local councils.

We have had a cash injection—£5 billion of new money is not insignificant—and it has made a significant difference. Introducing £600 million for a recovery grant gets the money to areas that need it most. That is reflected in the fact that we have not had a single section 114 notice issued as a result of financial distress. But let us be clear: 30 local authorities needed exceptional financial support through the budget process, so a lot of work is required here.

As we move to the multi-year settlement, we have to reconcile reorganisation within the lifetime of the three-year multi-year settlement, so that at the end of the settlement, the transition has been completed, the funding has been settled and all councils in England are on a firm footing for the future. Had we waited, we would not have achieved that, and we would have allowed the reorganisation to go beyond the multi-year settlement. I think that would have provided more uncertainty for a system that is quite fragile at the moment, when actually, it needs certainty and direction. We are not doing this because we are gung-ho, but because we believe that these structural reforms are needed and necessary.

I absolutely believe not just in consultation, but in collaboration and co-operation. That is about how ideas and proposals can be co-produced. It is for local areas to do that. There will be a statutory consultation on the proposal, and that will happen as a matter of course. But in the end, it is for local areas to make sure that they are having those local conversations and are coming forward to the Government with proposals that mirror what the local desire is, within the art of the possible. I have confidence that local leaders have that shared commitment, too.

This order, which was laid on the 11 February, is essential to delivering the Government’s commitment on devolution and reorganisation to the fastest possible timescale, for the reasons that I have set out. The order was made using delegated powers, which have been given in primary legislation granted here, and have been previously used in the same way. All the appropriate steps were taken, and both process and precedent were carefully followed. Nothing is being imposed on local areas—the Government are committed to the devolution priority programmes, and the emerging proposals for the new unitary councils are, by their nature and result, bottom-up. All requests for election delays to deliver reorganisation and devolution to the fastest possible timeframe follow direct requests from local leaders of the affected councils.

Devolution and strong councils with the right powers will mean that hard-working councillors and mayors can focus on delivering for their residents on a stable financial footing. It will strengthen the democratic accountability of local government to local residents. A final point that I have not covered is the ordering of by-elections that will take place. The guidance will set out that by-elections will be dealt with in the usual way; they will not be affected by this order.

Oral Answers to Questions

Debate between Jim McMahon and Vikki Slade

Monday 20th January 2025 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[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.

Local Government Reorganisation

Debate between Jim McMahon and Vikki Slade

Wednesday 15th January 2025 Commons Chamber

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[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.

Provisional Local Government Finance Settlement

Debate between Jim McMahon and Vikki Slade

Wednesday 18th December 2024 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests, as I am a Member of Bournemouth, Christchurch and Poole council. Local government was brought to its knees under the last Conservative Government, with funding slashed and responsibilities piled on its depleted and exhausted workforce. I thank the local government workforce and wish them a happy Christmas.

I and my local Liberal Democrat colleagues welcome the move to multi-year settlements—something we have long called for—and the funding announced today for homelessness prevention. I agree with the Deputy Prime Minister and the Minister that we must eliminate the use of B&Bs, especially for families at Christmas. I also welcome the announced consultation on changing the funding formula, as listening to our local leaders is absolutely crucial.

However, we remain really concerned about the removal of the rural services grant, which suggests that the Government do not understand the nature of rural communities, including the difficulties of providing services over sometimes vast areas, subsidising public transport, and identifying hidden poverty, often among older populations—that costs an awful lot.

On special educational needs, it is deeply worrying that councils—particularly those that may literally run out of money, such as Bournemouth, Christchurch and Poole council—still have no idea about what will happen to the statutory override. How are they supposed to set their budgets in February without that certainty? Can the Minister confirm that no council will be forced to join the Safety Valve scheme, for example, which would put at risk the support provided to some of the most vulnerable children?

As we go into winter, the impact on social care is of the greatest concern. Dorset council shared with me a letter sent to the Dorset Care Association in which the director of adult social care states:

“We simply will not have the resources to meet the national insurance contributions for providers.”

Indeed, the Minister told me, in response to a written question, that only direct national insurance costs would be covered. What does he say to providers and to staff in charities such as Diversability, who fear for their jobs this Christmas?

[Jim McMahon]

It is important that we have a debate on local government finance based on the numbers. I have said already that, when taking into account council tax, no council will see a reduction in its core spending power. That means that before the final settlement, and not including extended producer responsibility and live parts of the grant, the hon. Lady’s own council will see an increase of at least 5.8%. We are covering the national insurance contributions made there, and in addition we are funding an extra £880 million through the social care grant. We have heard representations through the sector.

We are not saying that all this will fix everything today—it cannot. We are less than six months into the new Government and we have 14 years to reconcile. I hope the hon. Lady does not mind, but I remind her that a number of those 14 years were under the coalition Government. What we missed then and are trying to make up for now is that if we take away community and preventative services, which we all know make a big difference—not just in cost but in outcomes—we end up paying more and more at the back end, but for worse outcomes. The cruelty is that the Liberal Democrats’ moment in government, which I accept was short, was the time to invest in reform and prevention. That time was not taken and that opportunity was missed, and 14 years later we are reconciling that and fixing the system from the ground up. We will do that.

Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting)

Debate between Jim McMahon and Vikki Slade

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Jim McMahon]

Q The first part of the question was more about how agile the system can be. Providing for secondary legislation as part of this Bill is about having that agility and being able to move to recognise any shocks in the system to ensure that, if there is a hit to the local economy, or the high street in particular, the system can move quickly enough at the right point to save it.

Gary Watson: That is one of the criticisms of the rating system. Outside of section 47, it was not flexible and could not adapt very quickly. I think it has to be a good thing to have that flexibility both in the multipliers, including the higher one and the lower one, and in how it allows you to direct the particular relief. It is good for the rating system, including those who pay the rates and local government.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

Q I would like to touch on that further. The Bill will give the Treasury the power to apply those additional multipliers. Do you feel that should be a local decision? You have hit the nail on the head; the way business rates work can be impacted by a local situation, such as a retailer going out of business or there being very high rents. Do you think that the Bill gives local areas the ability to think about how they might need to apply different multipliers? Would you like to see more regional or local implications, rather than it all coming through the Treasury?

Gary Watson: I go back a long time in business rates; I was working in rating up until 1990 when it was very much the local authority that set the rate and collected the rate. That was one of the reasons why they went to a national non-domestic rate in 1990. I think the councils have a key role to play. That is why I am keen for the relief system to give local authorities an element of discretion so that they can direct reliefs to certain types of rate plan. That goes for not just the high street but the wider picture.

In terms of ensuring an element of consistency, it was interesting that when the reliefs were coming in during the pandemic, there were a lot of local authorities turning around and saying, “Can’t you just tell us what it is?” Then central Government were saying, “You wanted the discretions and now you want it controlled. You can’t have it both ways,” so I think it is a balance. It raises so much money: all the strengths of a property tax are there for both central Government and local government, and for the ratepayer as well. It is about getting that balance.

Controlling the central rate is right, but making sure that councils have an element of discretion, whether through variance in the multiplier or a particular relief, is something to be considered. But again you have to be careful, because local government is different in lots of different areas. There are different challenges in lots of local authorities, and you are sometimes trying to have a rating system that fits every part of the country. That is why you need that flexibility there.

--- Later in debate ---

[Jim McMahon]

Q On the point that you made about the potential to improve the system more generally, clearly we want this to be a measure that supports the fabric of community. In the end, these are retail businesses, but they are often the places that bind communities together. That is very much the way that we as a Government perceive them, and perceive the value of our high streets and our precincts in our villages and towns. From your perspective, what measures could be taken to really target the measure to ensure the support is given where it is needed?

Edward Woodall: On the multipliers, we will have to see if the rate of the multipliers is going to have an impact overall. I gave some examples of where you set the multipliers determining how much businesses can invest. What is described in the Bill is well targeted for retail, hospitality and leisure, to support the areas my members trade in and the types of businesses that the communities want in those locations. If we look at our polling about the most desired services on local parades, convenience stores, post offices and pharmacies come top, and all of those trade out of similar premises. Hopefully, it will help our sector, but it will also help the other businesses that trade in those locations as well to continue to deliver those services too.

[Vikki Slade]

Q Thank you very much for coming in to give evidence. On the timing, we know that retail, hospitality and leisure relief will reduce to 40% in April, but these measures will not come in until the April after that. Do you have any concerns about the impact on convenience stores during that year, before we know what will be happening the following year?

Edward Woodall: If you talk to convenience retailers now about business rates, what is in the front of their minds is the reduction in retail, hospitality and leisure relief, which has gone down from 75% to 40% from April next year. That is a big hit, among a cumulative burden of other measures that were announced in the Budget. That is concerning for them. They talk to us a lot about that, as part of the overall Budget package being challenging—and it was a big challenge, with £660 million costs for the sector.

That said, we knew that the retail, hospitality and leisure relief was introduced as a temporary measure during the covid pandemic, so we welcome the fact that it has not disappeared completely but has been tapered. We also welcome the principle that is set out in the Bill that we are giving a bit more permanency to support for retail, hospitality and leisure businesses on the high street in the future. There has been a cycle of changes in the policy over time, so hopefully this will give us a bit more of a stable footing to understand that. That does not just help us; it helps the other businesses from the retail industry that are thinking about investing in those locations too, but also those from hospitality and leisure.

--- Later in debate ---

[Jim McMahon]

That would be very helpful.

[Vikki Slade]

Q You talked a lot about the retail properties over £500,000, but there is also a cliff edge at £51,000. The Fantastic Things Emporium in Bournemouth is a brilliant treasure trove of lots of microbusinesses that would otherwise not have the ability to be on the high street. Is £51,000 the right level? Should the level exist at all?

Helen Dickinson: I will start and then hand over. Tom highlighted earlier that whenever you have a threshold of some description, there will be a cliff edge risk. I know it is a goal of the current Government, as it was of the previous Government, to ensure that small and microbusinesses get the support they need to be able to grow. There is recognition right across retail that there is a case for a higher discount for really small businesses as they begin to grow and a next-level discount, for want of a better description, for those above that. The threshold risk is there, but the improvements proposed in the discussion paper, which are not necessarily in the Bill, about transparency from the Valuation Office Agency on data and the processes it goes through should at least give a greater ability to get through the appeals process and give people more clarity and certainty. That will hopefully avoid at least some of the consequences of those thresholds.

That is a long-winded way of saying that there is recognition that there needs to be a greater discount for really small and microbusinesses. You have to set a level at some point. Is £51,000 exactly the right figure? Whether it is £51,000 or £500,000, it is important that it indexes with inflation, because otherwise it will get eroded over time. Whether that needs to be in the scope of the Bill is part of the way to address your question. I do not know if that helps. Tom, do you want to add anything?

Tom Ironside: On that final point, in 2001 there was around £40 billion of rateable value on the list. Now we have about £70 billion of rateable value on the list. It is inevitable that if you do not have some sort of uprating mechanism—we have identified the £500,000 threshold, but I suspect that you could make an equal case for the £51,000 one—you erode the benefit and purpose of what is being set out. We feel quite strongly on that front.

--- Later in debate ---

[Jim McMahon]

Q I accept that up to a point, but the temporary relief that the previous Government brought in to cover the impact of covid on the high street and retail, hospitality and leisure was introduced at a time when the sector was decimated and the country and the economy changed beyond recognition, in a way that none of us had experienced. That is not the world today, but the operating environment is still very difficult. Have you made an assessment of the impact of the previous temporary relief coming to an end in the form of a cliff edge? It was just going to stop and there was no provision for it to continue in any form in the Budget or the overall forecast. What impact would that have had on the high street?

Stuart Adam: The short answer is that we have not, and I am not aware of any good empirical study of what that was likely to do. It is slightly interesting and strange the way it evolved, because of course it was introduced as a relief in desperate times during covid. But as covid was coming to an end, it was made more generous rather than less. It moved up from 50% to 75%, if I remember rightly, at that point. Again, I am absolutely not disputing in any way that it did provide and does provide much needed respite, particularly at times of crisis, but as a long-term permanent thing I do not think the effects are the same.

One thing I completely welcome is that whatever you want to do with this—setting it up as a clear, long-term part of the system rather than having year-to-year uncertainty as to what the number will be and whether it will continue and so on—and whatever decision you make, making it a permanent part of the system is a very good thing.

[Vikki Slade]

Q In Northern Ireland, there is a single regional rate and then a local levy. Do you have views about whether there should be any local influence in terms of these determinants reflecting higher rents, particularly in the south-east or south-west, that put lots of businesses above the £51,000 threshold?

Stuart Adam: There are a number of questions. One is how far the rates should be set locally versus centrally. Obviously there was a history there of them being centralised in 1990. There is a question as to how much localism you want. If you are going to have local taxes, property taxes are a pretty good choice—housing more so than business property taxes. But if you wanted to localise more taxes, business rates would not be a bad choice. There might be things you can do along the lines that we have seen already about, for example, having a ballot of local businesses as a requirement and that kind of thing. There is a case for whether it should be local or central—I do not have a strong view either way.

There is a question as to how far the revenues should be redistributed across the country and whether areas that get more business rates revenue should have more funding as a result. That, again, comes into a broader question about the local government finance system. It is not obvious that just happening to have more high value businesses in an area is a good reason for that area to get more revenue. I think there is a better argument for things such as business rates retention, where you want to give local authorities some incentives, some reward, for having more businesses, encouraging them and generating local economic growth and so on.

There is then a question about whether, even if it is set centrally, the rates and thresholds of business rates should be different across the country. It is not obvious to me that there is a good argument for that, but it is not obvious to me that there is a good argument for it being different across different sizes of business or sectors, either. I would not rule out that you could make a case for it. In those other cases in terms of smaller businesses and retail, hospitality and leisure, you can make a case for it. I am not saying that you should never have any variation, but I would want to hear that argument made clearly. In terms of variation across areas, I do not think I have heard that argument made.

[Jayne Kirkham]

Q I am from Cornwall, where we have full business rates retention, so that puts a slightly different spin on it. Given that that varies across the country, maybe you could mention that. You talked about high street rents going up or down. I come from a place where there are lots of seaside towns and limited space by the water. A lot of our properties are owned by faceless corporations or insurance funds, so the rents are not remotely responsive. They have stayed high for a long time because they are seen as an asset on a balance sheet. We have struggled very much with that. For some places—maybe you would disagree—the business rates are even more important because the rents either take a very long time to have an impact or we are just left with empty properties for a very long time. Would you agree?

Stuart Adam: I think I would disagree. Actually, it is possibly even more true in the cases where properties are owned by big, faceless corporations, because clearly they will want to set the highest rent they can get away with, but the amount of rent they can get away with will depend on the demand for that property, and the demand for the property depends on the level of business rates and rent attached to it.

You would expect rents to adjust in the long run. How long “the long run” is is an interesting question. There is some evidence that it starts to happen in a relatively short period—something like three or four years—but the evidence on that is not great. The rent adjustment probably happens more quickly than it would have 20 or 30 years ago, because commercial rent contracts have become shorter and there is more use of things like commercial voluntary arrangements, which allow rents to adjust more quickly. It can take a fair number of years before rents are renegotiated, contracts come to an end and so on, but I would still very much expect it to happen.

Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting)

Debate between Jim McMahon and Vikki Slade

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Jim McMahon]

Q It is important to say, though, that the 1 million vacancies I referred to are in existing schools. So the teachers are in the classrooms, and the buildings are there. These are vacancies in the existing school system.

Simon Nathan: I appreciate that. The point I was making was that some of the money that would be raised to support greater investment in state education will get eaten up by pupils moving over.

In terms of hotspots, it would depend very much on the part of the country—obviously, our schools are predominantly in the south and in certain parts of London, in particular. We fully appreciate that, on a macro level, there is a certain level of vacancy, but our concern is that there will be particular parts of the country where there might be more hotspots.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

Q I am conscious of trying to keep to the Bill, because I am worried that a lot of your comments are really about the state of the independent sector more widely. As has been suggested, the Bill will make a relatively minor change, although I understand that it comes on the back of other things. What thought has been given to how the independent sector might mitigate what is effectively a change to a property tax by rationalising the amount of property it uses? An awful lot of independent schools have an awful lot of land and property, and they could perhaps mitigate the impact by doing that. Has any thought been given to rethinking how you use property?

Barnaby Lenon: Before I ask David to answer that, can I just say that there are not a lot of independent schools that have a lot of property. There are a small number that definitely have a lot of property, but if you had visited as many independent schools as I have, you would see that a lot of them are in converted houses, with no other property. Many, many of our schools have far less property than a normal state primary school would have. Nevertheless, your point is taken.

--- Later in debate ---

[Jim McMahon]

Q It was more about a recognition from industry that, for the institutional investors in property, the Government are going a long way to bake a permanent relief into the system, rather than year-on-year reliefs. That relief can help to fill those units that investors maybe really struggle to let because, whatever the rent levels, they are just not commercially viable for the end user, and these measures will help in that end.

Rachel Kelly: I think they will go some way to helping. If the ultimate goal of the Bill is to support high streets, there are probably areas where we would suggest that it is not as targeted as it could be. If you think of a really thriving high street in your area, retail and leisure will form a large part of it. However, a thriving high street also has offices and other businesses that provide footfall to those retail units. It has big anchor stores that might not benefit from this smaller relief but provide really important footfall for the other retail and leisure occupiers. It has car parks that are really vital to bring in customer bases for those high streets. It often has lots of asset classes, such as GP surgeries, libraries and some forms of education—you get my point. A thriving high street has a huge mix of different businesses all supporting each other. It is a really important—and maybe fragile—ecosystem. Yes, this measure will support some of those units, such as the smaller retail and leisure ones, but I am not sure whether that is enough to support the whole high street ecosystem.

[Vikki Slade]

Q I completely accept the point that a lot of the talk around the Bill is about high streets, because of the particular references to retail, hospitality and leisure. But it is a Bill that affects non-domestic rates and multipliers for businesses. Do you have any thoughts or comments on the fact that there is no reference to manufacturing and how we support manufacturing businesses? Do you think that should be included within the Bill?

Rachel Kelly: Whether that can be included in the Bill, I do not know. But yes, the issue of an uncompetitive property tax system is relevant for lots of industries, and manufacturing is the one that you raised. Ultimately, that comes back to the higher rate of tax across the board. If you are alluding to the higher tax rate for the rateable values above £500,000—yes, it strikes me as an arbitrary threshold, and it will capture lots of different businesses and sectors. Maybe there will be some adverse consequences of that, which might be counter to the policy aims, but I am not sure.

It is a tricky one to balance. Ultimately, if this relief for retail, hospitality and leisure will be funded within the business rate system, our instinct is that it would be better to fund that across as broad a spectrum of the economy as possible, rather than narrow down that tax base even further. For context, the proportion of properties with a rateable value above £500,000 is 1% of commercial property in the UK. If we condense that down even further, it is a very narrow tax base to fund these other changes, so I am not sure that is sustainable. I am not sure we can address the issue of competitiveness for other sectors without addressing the elephant in the room, which is the huge tax rate that we have for everyone else—55%, or 50% for smaller businesses. They are very high tax rates compared with any other business tax.

Oral Answers to Questions

Debate between Jim McMahon and Vikki Slade

Monday 2nd December 2024 Commons Chamber

[Mr Speaker]

We now come to the Liberal Democrat spokesperson.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I hope that you will endure us, Mr Speaker. Dorset council, which covers half my constituency, has agreed to work with Somerset and Wiltshire—all unitary councils—on a devolution arrangement, but residents are already raising concerns that top-down reorganisation will take decisions further away from their homes and communities. They are worried about what a mayoral combined authority might do to them. What assurances can the Minister give that the town and parish councils, on which residents rely so heavily, will not be expected to keep unitary councils afloat, and that my residents will not see back-door council tax rises as a result of the changes?

[Jim McMahon]

Central Government have said to local government that we want to reset the relationship and work as partners in power, and it is not unreasonable to expect that councils will do the same at a local level and will work together in partnership. We see that across the country: local councils work in partnership with their parish and town councils in the interests of their community. Whether or not reorganisation takes place, we expect that to continue.

Oral Answers to Questions

Debate between Jim McMahon and Vikki Slade

Monday 28th October 2024 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

Rough sleeping is the most visible end of the homelessness crisis, but it is also brutal—the average age of death for rough sleepers in London is just 44. The rough sleeping initiative is literally saving lives—in Bournemouth, Christchurch and Poole, 102 people are kept alive every year through that programme—but it is due to end in March 2025. Removing it has been described by local teams as nothing short of catastrophic, so what assessment has taken place of the impact of that initiative, and what assurance can the Secretary of State give local authorities about the maintenance of the scheme so that they can plan for the long term?

[Jim McMahon]

Again, I ask hon. Members to wait for the spending review on Wednesday, and for the provisional settlement in December. We are under no illusion about the pressures faced by councils on homelessness. In the end, we need to repair the system, which is about providing safe, secure and affordable housing for people to live in. We will do that, but we also recognise that there is a problem today. Further detail on that will follow.