Local Government Finance Bill

Jonathan Edwards Excerpts

Wednesday 31st October 2012 Commons Chamber

[Brandon Lewis]

I must stress that that is the approach the Local Government Association wanted and has been pushing for. It is also linked to the operation of the safety net more generally if a business has a problem mid-year. The draft regulations we published last week envisage safety net calculations and payments being made after the end of the financial year, and safety net payments on account to be made where the authority thinks, on the basis of its estimates before the start of the year, that its rates income will be less than the threshold. The draft does not currently propose that authorities be able to apply during the year for a safety net payment on account, in line with the clear views of our local government finance working group. These regulations are out to consultation in draft, and we look forward to receiving comments and will obviously feed back.

The hon. Member for Warrington North also commented on the discrepancy, as she perceives it, between some of the Bill’s clauses and the situation with regard to the Audit Commission. I was somewhat flabbergasted, because I think that she might have been trying to argue for retaining the Audit Commission, but this is a transitional phase. It seems amazing to suggest delaying parts of the Bill or not having the clause that will allow it to move forward in dealing with that side of the Audit Commission, because the Bill is about driving growth of about £10 billion. To do something because of her views on the Audit Commission seems very short-sighted for our economy, so she will excuse us if we resist that.

I will turn to the comments made by my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), who made a powerful and clear speech in which she talked about town and parish councils working together. On the technical side of her point, I point out that parish councils raise their own cash with their precept; they are funded not through the money raised by business rates, but directly through council tax. We feel that it is right that the district billing authorities receive funds from business rates as they are the key local drivers of growth. However, I want to stress that I feel clearly—this has been reflected in the comments made by several hon. Members this afternoon—that they should work with all bodies that can support growth, including parish councils, and will be involved in some areas in the potential for growth.

We have worked with the Local Government Association, the National Association of Local Councils, with which I had a good meeting earlier this week, and other organisations and parties in the other place throughout the passage of the Bill, and I would like to thank all parties that have been involved in feeding into it. It is also important to note that there is a range of measures for driving economic growth at community level, which provides parish councils with a particular opportunity to get involved. There are community budgets, neighbourhood planning, the right to build, the right to challenge, and the community share scheme, all of which will play a huge part.

My hon. Friend the Member for Mid Dorset and North Poole—I know that parish councils are close to her heart—will have noted that only today we announced formally the measures to make it easier to establish new parish, town and community councils, which I think is an important step forward, working with local communities, to offer the opportunity for more people to get involved and to be part of their local community. Their local council at parish, district, county, unitary and metropolitan level will be part of driving economic growth, which is at the heart of the move forward with the business rates retention scheme.

My hon. Friend the Member for Peterborough (Mr Jackson) spoke clearly about the power and ability of LEPs and touched on Lord Heseltine’s report, which highlights exactly where LEPs and local enterprise zones have a huge part to play. As I have said, the business rates retention scheme makes a fundamental shift in the way local authorities are funded. It will give councils a strong financial incentive to be part of driving local economic growth.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

In the spirit of localism, will the Minister now commit to implementing the recommendations of the Morgan report, commissioned by the Welsh Government, which calls for the full devolution of responsibility for business taxes to the Welsh Government so that they, too, can increase their taxation base?

[Brandon Lewis]

I thank the hon. Gentleman for his intervention, but he will excuse me if I stay within the remit of the Bill and do not delve into changes to financial and tax arrangements that the Treasury, the Welsh Assembly, the Local Government Association and many Members across the House will undoubtedly have a view on. I welcome his decision to choose this moment to start that debate.

What I think is important in business rates retention and the way it moves the goalposts and the way local councils work is that it is really starting to shift back to what local authorities always want—I know this from my time as a council leader—which is to have their hands on the purse strings and the ability to have a direct impact on the amount of money they can bring in. They want more direct control over the way they work, their decisions, the way they develop the local economy and community and the way they involve the community. Local authorities will see a financial benefit and will be able to use that income to provide even more benefits for their communities and residents, and perhaps they will also use it to keep council tax down and, in so doing, further develop the work the Government are rightly doing through the council tax freezes we have brought in over the past few years. This is a very important step forward, and we are pleased that local government seems to be enthused by it. We hope that it motivates them towards growth.

We are looking at the consultation results that we have received, and we will return to them later this year. We are setting out a whole new framework in which local government can work and where it becomes part of driving its local economy. That is not only a key part of how it shapes its community; it means that it can benefit from the advantages and growth that it sees in that community. The community will see that the local authority is benefiting in that way, and we will get a positive circle that can only be good for our communities, for our residents, and for economic growth in our country.

Lords amendment 1 agreed to, with Commons financial privileges waived.

Lords amendment 2 agreed to, with Commons financial privileges waived.

Before Clause 9

Council tax reduction schemes: review