Justin Tomlinson
Main Page: Justin Tomlinson (Conservative - North Swindon)Local Government Finance Bill (Fourth sitting)
Justin Tomlinson Excerpts(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 2, in clause 1, page 1, line 7, leave out subsection (2) and insert—
‘(2) In Schedule 7B, in paragraph 8 of part 3, after sub-paragraph (1) insert—
(1B) The regulations may, in particular, make provision for the determination of an amount to be deducted in order that the billing authority retains the specified amount for the purposes of funding social care services.”’
This amendment would enable billing authorities to retain a specified proportion of non-domestic rating income specifically for the purposes of funding social care services.
Amendment 23, in schedule 1, page 32, line 23, leave out paragraph 7 and insert—
‘7 (1) Part 2 is amended as follows.
(2) In paragraph 4—
(a) leave out “each” and insert “certain”;
(b) leave out “authority” and insert “authorities”;
(c) at end insert—
(2) “certain authorities” are those authorities specified by the Secretary of State in regulations.
(3) The regulations may, in particular, impose conditions upon the use of central and local share funds calculated under paragraph 13(2) of this Schedule.”’
This amendment would enable a local and central share to be retained for designated authorities. The Secretary of State would publish criteria for the use of such funds.
Justin Tomlinson (North Swindon) (Con)
It is a pleasure to serve under your chairmanship, Mr Gapes. Through your leadership, we have had a very positive beginning to the Local Government Finance Bill.
I am mindful that I am following a very good speaker, someone who has significant powers and influence: first, the hon. Member for Harrow West magicked up a written answer over lunchtime; and, secondly, he was so persuasive when challenging my hon. Friend the Member for Northampton South to engage with South Northamptonshire Council that that meeting also took place over lunchtime. Therefore, I fear that our very able Minister may be tempted to accept some of the amendments and I feel a need to step up and defend the thrust of the principle behind the debate.
The whole principle is that of incentivising and trusting local authorities, as we heard in evidence on Tuesday. From the Local Government Association briefings, it is clear that councils would like to have the 100%. That is vital in my opinion. I served as a councillor for 10 years and I have been lobbied by and have spoken to a number of local authority representatives. They are interested in seeing further details—I am sure we will be going over things in great detail in coming weeks—but the principle is that they wish to be trusted. They are best placed to make those decisions and to take those actions. On Tuesday, I challenged the witnesses about that. I asked whether there was sufficient business capacity. Understandably, the witnesses were quite defensive, but I was encouraged by their enthusiasm for the challenge and the opportunities being presented.
We must not forget the residents; that is also vital. Often, when we talk about growth in business rates, it means new businesses, expansion and development. That is not always universally welcomed by local residents, as anyone who has ever served on a planning committee would know. It is right that the principle is that, if they are going to be inconvenienced as a community, they should also be rewarded for that.
That also provides a focus for local authorities. I am very fortunate. My local authority is very proactive in this area—our local plan was agreed very early on and it does its best to encourage growth—but it does not necessarily have sufficient focus to speed up the process sometimes. I am lobbied by people trying to bring new development to my constituency, who say, “We would like it to be quicker.”
Mr Thomas
I am delighted that the hon. Gentleman has been encouraged, no doubt by the Minister and the Whip, to speak in defence of the Bill. As he will remember from Tuesday’s sitting—I think he was present—one of the witnesses, one of the voices of business, said that, because of the scale of the cuts in funding to local authorities, many of the services labelled as discretionary which help businesses have been substantially cut. Does that not underpin the concern that we on the Labour Benches have about the need for proper redistribution?
Justin Tomlinson
First, to be absolutely clear, I do not need any encouragement by the Whips to engage. I was elected in my own right. That intervention actually strengthens my point. Whoever is in government, difficult decisions have to be taken about public spending, and elected representatives are mindful of the people they are accountable to. It is often easier to focus decisions on some of the services—perhaps those that will directly affect businesses, since they will not necessarily queue up at the ballot boxes. However, under the proposed new system, protecting business income through business rates will become a greater priority for local authorities. We have rightly focused on new opportunities, but the change will also protect existing businesses and give them a greater ability to get an audience with decision makers and say, “By working together, we can not only grow but protect existing jobs.”
Rob Marris (Wolverhampton South West) (Lab)
The hon. Gentleman said that his local council does its best to encourage growth, and I am pleased to hear that. At the moment, his local council, on which I think he served, does not have the powers that the Bill will confer if it is passed. Is he saying that his local council would have tried harder to encourage growth and business if it had had those powers when he was a councillor?
Justin Tomlinson
The hon. Gentleman pre-empts some of the things I am coming to. I made it clear that I am very lucky to be the MP for an area with a local authority that is proactive in this respect, but that is not a given across the rest of the country. I do not disparage other councils, because all councils have to decide their own priorities. I represent a high-growth area where, for those who are interested, 8,100 jobs have been created since 2010. I know it is hard to believe, but that is greater than the average gate at the County ground. That is because the council recognises that it should be proactive. Could we have done that faster? Yes. We are landlocked by several local authorities that are less keen on additional development and growth. They have their reasons for that, and I respect those.
We will deal later with the pooling of some decisions and the sharing of some benefits. I was particularly taken by the point about Heathrow, which I will come back to, because I see further potential in that area.
Mr Thomas
Before the hon. Gentleman flies away to Heathrow, may I take him back to the example that I gave this morning of Allerdale Council? Its one major town is Keswick and it is surrounded by natural barriers to growth, so it is highly unlikely that there is substantial space for the type of property-based development that I accept the Bill could encourage in some areas.
Justin Tomlinson
I was coming to that point. As a broad principle, we are looking at not only new opportunities but protecting established industries, which is obviously topical. Local authorities can lobby the Government to ensure that such industries are protected, particularly if there is ever a change in the country.
Justin Tomlinson
May I ask the shadow Minister to be ever so slightly patient? I am being tempted to fly in various directions. I will finish this point, then turn to that one.
Why does this matter? We all talk about new income opportunities and providing incentives, and trusting local authorities as the best vehicles to deliver those. That is incredibly important, but we seem to be missing the emphasis on creating jobs. As I said, 8,100 new jobs have been created in my constituency and unemployment has fallen by 60%, in part because new regeneration and development projects have attracted businesses from other local authority areas that have not supported the business community so proactively. Those things matter to the people on the ground, because they benefit directly. As I said, the 60% fall in unemployment is making a genuine difference to people. We have to protect the maximum potential of the incentives on offer.
Rob Marris
The hon. Gentleman said that some, not all, of the council areas surrounding his council were not as keen—I think that was the adjective he used—as his own council. What evidence is there that the changes in the Bill would make those surrounding councils, which he thinks are less keen, keener?
Justin Tomlinson
One of the elements that I have picked up is the principle of pooling, whereby different local authorities and local enterprise partnerships can sit down and work together and share the benefits of this growth. The whole point is that the Government will incentivise and reward those areas that are going to support additional growth and, therefore, there is an opportunity. I will give more detail on that shortly.
I come back to the point that this will work only if really big warehouses are built. Obviously, the smallest businesses are exempt from business rates through the small business rate relief. That is a hugely important policy that I hope continues because it benefits so many of our micro and small businesses. I ran my own business for 10 years and, just before I became an MP, I benefited for a year from that. It did make a difference in what was at that time a difficult financial climate.
We must remember that there is a significant number of small to medium-sized businesses that could be in offices not much bigger than this room but are larger than would qualify under the small business rate. So it is not just about getting distribution warehouses. That is an easy opportunity for some areas, particularly for those with lots of additional land and good transport logistics. It is also about these small and medium-sized businesses. It is about working with the existing small and micro businesses to help them to make that step up. I have been involved in a number of debates where it has been said that it is a lot harder to go from four-plus employees than to start a business because there are all the additional matters to deal with. The Bill provides an incentive for local authorities to have supportive forums, engage with communities and look at how they can shape the direction of their policies to encourage growth. Again, the bonus is that not only will that generate additional business rate income, which we all recognise that local authorities need, but it will help to create that next generation of jobs.
That was a powerful point about Heathrow. It is probably the case with any national infrastructure project that the communities closer to it get the vast majority of the inconvenience, while local authorities much further away will get some of the benefits. Take Heathrow: my constituency would gain significantly from Heathrow, for the convenience of residents going on holiday and for the businesses. So my local authority has written to the Government to say, “Please proceed with Heathrow.”
If I were an MP directly under the flight path, I would have a very different postbag. Again, that is where pooling could come in. Perhaps those local communities with the most inconvenience could go to the others to say, “We would be less minded to object, to try to delay and frustrate, if you would share some of the benefits that you would get.”
The principle of pooling can be expanded much further. Innovative council leaders would use that to go to talk to other leaders to say, “Look, we can work together here. You help us so that we are inconvenienced less or rewarded slightly more for the inconvenience that we will suffer. You will get your growth; we will get some of that.” Those are discussions that can be had and we have some very talented council leaders who, I am sure, would take advantage of that.
Jim McMahon (Oldham West and Royton) (Lab)
Does the hon. Gentleman accept that councils have different roles and responsibilities? One is, of course, about economic development and growing the local tax base. The other is about being a voice of the community. A lot of the opposition to Heathrow and the flight path has been from local people who do not want their lives affected in that way.
Justin Tomlinson
Absolutely. I only focused on Heathrow because that was the one that was mentioned; there are lots of national infrastructure projects. The reality is that Heathrow will be expanded, so those residents are going to be inconvenienced.
At least this proposal would have allowed an opportunity for the respective and closest local authorities to do those deals and say, “We can see the inevitability, but we could speed up the process if we were to gain some more of the reward for the inconvenience of this national infrastructure project that happens to be sited in our area.” I would think that was a reasonable ask of my local area, if there was a demonstrable and tangible gain for that area.
Mr Thomas
The hon. Gentleman is advancing an interesting argument and I can see how, in certain circumstances, pooling might enable the benefit of a big infrastructure investment to be shared more widely.
Let us come back to the third runway. That is a national piece of infrastructure that will benefit the whole country. Therefore, the pooling point is surely less applicable than that about ensuring that the business rate growth that the third runway generates can be redistributed across the country. Amendments 1 and 23 would help to achieve that; I suspect pooling would not mean that every local authority in England would benefit.
Justin Tomlinson
I understand that, but that is saying to the local authorities, “We don’t trust you to lead on those sorts of negotiations.” I was incredibly impressed by the witnesses who gave evidence on Tuesday. I wanted to challenge and push them; I expected them to say that they were not up for this, but their enthusiasm and capability to deal with such matters was crystal clear. I am excited by these opportunities. There are lessons to be learned. We have seen some of this take place with LEPs. They are not perfect—they are still in their infancy —but there have been examples of good practice.
For me, the clause is about giving local authorities power, and a savvy local authority council leader would be leading conversations. I do not say that randomly. I have been an MP for six years and a councillor for 10 in a fast-growth town that has taken more than its fair share of housing development—in fact, it has been one of the fastest-growing towns, year on year, for the last 20 years. We have learned that it is better to lead those conversations, do the deals and talk to our less inclined neighbouring authorities to try to find ways to speed up the process, because, while I appreciate that there is inconvenience for local residents, it is good for the economy and good for people to be given jobs and housing. There is no better way of doing that than by releasing income.
Mr Thomas
The hon. Gentleman makes an interesting point. I agree that councils are often better at grasping the opportunities—be they for housing or infrastructure—that come in the wake of big decisions, and there are many examples of Labour leaders having taken a similar approach, Manchester’s being a classic case. However, that is not an argument against amendments 1 and 23, or indeed amendment 2. What does he have against the substantial redistribution that the amendments would achieve?
Justin Tomlinson
That neatly ties into my conclusion, which is purely about blunting the maximum incentive potential. If we are to focus minds, we should say to those innovative, great local authority leaders, “We will give you the tools to generate income and growth, and create new jobs, and to be rewarded for the inconvenience of growth and development.” We have to give them every single opportunity. If we have redistribution, local authorities will keep knocking on the door repeatedly to plead with the Minister for their special cases.
I have never found an MP or local authority who does not feel that their area is hard done by in some way. We are all skilled in looking at the statistics and saying, “We have a unique, special case for additional funding.” We need to allow like-minded local authority leaders who work well together, who lead with the LGA and share best practice, to have those sensible conversations. Fundamentally, we are not a million miles apart; it is just that the Government side are probably a bit more confident and trusting of the abilities and enthusiasm of local authority leaders.
Jim McMahon
I am not sure whether there is as much difference as the hon. Gentleman has laid out. There is acceptance that if there is 100% business rate retention, we need a system of tariffs and top-ups and a safety net to catch those who have unexpected changes in their business rate base. That is different from a scheme for business rate growth, which would incentivise local authorities who are really pushing forward. I would not say that those ideas are contradictory. What we are trying to do—I hope he accepts this—is ensure that the baseline is robust.
Justin Tomlinson
As I said, I recognise that there is not a huge amount of difference between us, but my plea to the Minister is: stay strong. We were enthused by the reference to “Dad’s Army” earlier, my dad’s favourite programme. Despite the realities that we face, we need to stand firm and trust and encourage local authority leaders.
Rob Marris
I salute the hon. Gentleman’s generosity in volunteering a transfer from the people of Swindon and Wiltshire down the road to, say, Hounslow or Heathrow. May I caution him that while his area has done well, which is great, he might come to regret some of these measures? For example, he might represent an area that has a major car manufacturing plant, which, faced with the United Kingdom leaving the European Union, might decide to close down. The business rate scenario in that area—hypothetically, wherever it might be—might then look very different, and its representative might therefore look differently on redistribution.
Justin Tomlinson
That is a very interesting intervention. By pure coincidence, I happen to have the Honda factory in my constituency. Another MP raised that point on the Floor of the House during the Brexit debate. I gently remind the hon. Gentleman that Honda operations, which used to supply 100% of its cars to Europe three years ago, was ahead of the Government and public opinion and switched to global exporting of the cars: 80% of the cars now go globally. The impact of the referendum does not cause any issue at all, now or in the future, to the major employer in my constituency.
We could look at this hypothetically. There will always be issues beyond local authority control, because the world changes. Industries and technologies will change. That is why there are protections in the Bill. There would also be an incentive for local authorities to start planning and looking ahead. Local authorities and MPs get lobbied regularly by employers telling us either that things are going great and they are looking to expand, or that things are potentially going wrong. When we are told that things are going wrong, there will now be an extra incentive to engage with them to find a way forward.
I remember when Honda was struggling during the financial downturn. It was still producing all those cars but could not sell them. The local authority—this is a good example—found the company significant amounts of land to store those cars on. Again, I was lucky that we had a forward-thinking, proactive local authority. Every local authority is different and they have competing priorities; this is about ensuring that that priority is absolutely at the top.
Mr Thomas
I have been listening keenly to the hon. Gentleman. He was going to come to the example of the council that has a series of natural barriers to growth: the Allerdale Borough Council, which Keswick sits in. I have not heard him talk about how the Bill will generate massive new incentives for it, but as the hon. Member for Waveney is now present, perhaps he might allude to the problems facing coastal authorities, where there is an obvious natural barrier to economic growth.
Justin Tomlinson
I would not dare to incur the wrath of the Chair of the Committee, Mr Gapes, who has made it clear that this is not the time to discuss coastal matters, although I am sure that by the end of the 10 sittings we would all welcome a day trip to some of those coastal constituencies to see them at first hand.
I felt I had addressed the point about landlocked areas. Although some areas will find it easier to attract additional large-scale developments, such as the warehouses I mentioned, this is also about maintaining and protecting industries that are already there. That may be a case of lobbying national legislators not to make changes, in order to protect them. It is also about expanding microbusinesses to tip them into a size at which they have to pay business rates, having grown sufficiently and increased their headcount. Not every element of additional revenue will be raised purely by big expansion; it will also be done by speeding up organic growth that delivers income and jobs.
Steve Double (St Austell and Newquay) (Con)
I represent a coastal area; in fact, mine is one of only three constituencies that have two separate coasts. We see the coast and the sea as assets, not barriers to economic growth. They can drive economic growth through fishing, tourism and many other sectors.
Justin Tomlinson
That is exactly the enthusiasm and innovation that we need to unleash across local authorities. I have every faith that our elected local authority leaders will seize the opportunity with exactly the same enthusiasm as my hon. Friend, taking advantage of it to deliver extra income and jobs.
Kevin Foster (Torbay) (Con)
Would my hon. Friend be interested to hear that Torbay Council is looking at a town centre regeneration scheme around Tor Hill Road in part of my constituency? They are bearing in mind the ability not only to get a commercial return on investment but to retain the business rates.
Justin Tomlinson
I am greatly encouraged. I had a gut feeling, based on what the witnesses said on Tuesday, that this was a great policy; I now feel even more certain. The quicker we can introduce this, the better.
Following on from the point about town centre regeneration, let me say why this policy will make such a difference. The Mary Portas report, which looked into the decline of traditional high streets, highlighted the point that one of the biggest problems is that local authorities continually increase car parking charges because they generate significant revenue. Unsurprisingly, with increased car parking charges year on year, town centres started to wilt and business rate income fall away. Local authority leaders recognised that, but they needed short-term ways to access money. Maintaining 100% of growth would provide an incentive to cut car parking charges, which hon. Members will be delighted to know Swindon Borough Council did; it reduced charges to £2 for four hours. Anybody who has free time and wishes to spend money in Swindon is most welcome. Unsurprisingly, footfall went up, and we will start to see a boost and regeneration.
Jim McMahon
I do not want play car parking top trumps, but I have to highlight Oldham Council’s decision to offer two hours of free parking in the town centre.
Jim McMahon
I could not possibly shine a light on my own career. One of the proposals in the Bill that we will question later—I hope that the hon. Member for North Swindon will support us—concerns local authorities that are not part of a mayoral arrangement. They will have the ability only to lower business rates, and not to increase them elsewhere to make up the cost. A lot of areas with stunted growth would not be able to afford to do that at all.
Justin Tomlinson
We will explore that in great detail, I am sure. In conclusion, I hope that the Minister will be encouraged by the great enthusiasm for the potential that we will unleash. I am sure that there are local authority leaders poised by the phone to start striking those deals to benefit from economic growth, the delivery of new jobs and the additional income that we all recognise local authorities desperately need.
Jim McMahon
It is a pleasure to serve under your chairmanship, Mr Gapes. Congratulations on steering the debate so far. We have heard a lot in the debate about the complexities of the issues. At headline level, local authorities are crying out for more power and autonomy; they want to be able to crack on and get things done, but they also want a safety net. They want to know that if things beyond their control happen, the delivery of public services in their area can be maintained and will not be affected by a large employer pulling out, or something happening to the business rate base that is entirely out of their control.
A lot of the areas that would be most affected by the downside of this proposal are those that can least afford it. My local authority in Oldham has an historically low council tax base; the majority of properties—70%—are in bands A and B. To generate the same amount of council tax as a wealthier area, people in Oldham naturally have to pay more per property than somebody in the wealthier neighbouring areas of Stockport or Trafford. When we push further pressure on to the council tax payer to pay for the pressures on adult social care, we are expecting the poorest in society in those areas to pay proportionately more of their income to fund basic services that we all need and demand.
When the Minister reaches the age to need social care, I hope the system has been fixed. At the moment, there are 1 million people who need adult social care but do not receive it. Those same people would have got the care in 2010, but are not getting it today because eligibility has been pushed back so far. Many councils now have a two-tier system. People who were already in receipt of care are, by and large, receiving the care that they have received for a number of years. It is different for new entrants. Neighbours living on the same street, with the same health conditions, needing the same support are being told they cannot have care because they are new entrants into the social care system. That cannot be right. We talk about postcode lotteries and compare the wealthiest with the poorest local authorities as a way of highlighting that, but two people in the same area on the same street with the same conditions, but coming into the social care system at different times, are receiving very different levels of social care. That cannot be right in a just and fair world, and I worry about that.
I will extend my argument to council tax, because our discussion is about localisation and the self-sufficiency of local government finance. Let me highlight the table produced by the Department for Communities and Local Government that shows an additional £5.5 billion being generated, predominantly through council tax, to pay for adult social care. If any Government were to say to the public, “How about this for a proposal? We’re going to increase your council tax by 25%. What do you think about that?”, there would be uproar, yet that is exactly what the Department’s figures propose: a 25% increase in council tax over the Parliament. For a town such as Oldham, that will mean that a band E property will be charged £2,000 a year in council tax. Imagine public support for council tax at that point.
A lot of people think that council tax just gets the bins emptied, but universal services that people pay council tax for are being removed and reduced all the time to fund adult social care and safeguarding. Pretty soon, we will reach the point where people say, “What on earth am I paying my council tax for? I am paying more and more every year and receiving fewer and fewer services.”
Jim McMahon
That is the crux of the issue. Does this Bill really address a financial system that is under pressure and probably at breaking point—we all accept that it is time to renew local government finance and put it on a strong footing—or does it just reinforce historic inequalities across the country? Unfortunately, without the detail that we have requested a number of times we just cannot make that assessment. However, we are being expected to support this because we believe in devolution and have heard the calls from councils to have more responsibility and direction over their lives.
Let us be clear what the levers of change actually are. The Secretary of State will still prescribe what council tax increase can take place. By the way, they are saying that they are not going to report to Parliament on what that will be in the future—a minor point—and we are not going to get a local government finance settlement reported to Parliament in the future.
Not only is there no parliamentary scrutiny of this new world, but councils have not got the levers of control to reflect on the number of bands in their area. They cannot change the number of bands; they cannot introduce intermediary bands; they cannot have smoother transitions. They cannot even revalue properties—the last revaluation took place 26 years ago. Why is that? Central Government duck it year after year, time after time, because they do not want the backlash they would get at local level. Our councils are cross-party, by the way. This is about the Government not wanting to take the flak from the public for putting up council tax. That could be managed at a local level. There have been calls for areas to take that responsibility through some of the devolution deals.
Nor is there any ability to change the scheme of discounts. Fallowfield in Manchester, for example—where there is a strong student population living not in halls of residence but in terraced streets—is almost a whole ward occupied by students who pay absolutely nothing in council tax. Ask Manchester City Council if it would like the freedom to reflect that.
Even if we do not introduce that measure as part of the revision of council tax, we could put the burden on to landlords. Rather than put it on council tax, we could quite easily make provision for that within the business rates Bill. One might say that landlords will just put it on the rent, but if they own a three-bedroom terraced house in Manchester they will probably get £110 a week. If they rent that house to students, however, they will probably get £60 per student per room, so they are already earning far more by renting to those students than by renting to a family. It is right that somebody pays for the headroom to provide the services to the local community.
This is not, however, about whether we prescribe at local level. My point is that we are putting a burden on council tax and on business rates. We say that we welcome leadership at a local level and local innovation, but we are not giving local authorities the levers to affect the council tax or business rate base in their areas in the way that they have asked for.
Justin Tomlinson
Rather than seeking to tax students, perhaps we could be more innovative. For example, Oxfordshire council is not keen on development, but Swindon council could take some, and we would then gain from the council tax, the new homes bonus and the growth in the business rates, while Oxfordshire would have avoided the inconvenience of the development. That is the innovative way to do this.
Jim McMahon
I am going to pay a visit to Swindon at some point—it feels like it is the hallowed land for development. I have visions of 20-storey tower blocks shadowing the town.
It is not accurate to say that we are proposing to tax students. Let us approach this issue in a mature and measured way and stop the cheap headlines. This is about making sure that there is a resilient and robust tax base in every area so that local authorities can generate the tax needed for public services in their own places.
We know the impact of not doing so. Adult social care complaints have gone up by 25%—people who are in receipt of services have increased the number of complaints they feel they have to make—and there has been a rise in 15-minute visits. This is not a cost-free exercise. Government seem to have a view that if we just turn a blind eye, say that it is not our problem and tell local authorities to find a solution—and if we just move money around without there being any extra money, which just helps us feel a bit better about ourselves—there is no problem. Well, speak to NHS England and ask what the problem is. The longer we ignore the pressures on adult social care, the more we push the burden on to the NHS. People who should be looked after in their homes are being forced into hospital to get the treatment that they need, and people in hospital cannot go back home and are having delayed discharges because the support they need is not ready for them to be able to go home. The cost of that is £820 million a year. There is a cost of doing nothing.
Mr Thomas
My hon. Friend makes a good point. I will come back to the issue of new responsibilities, if he will forgive me, because it is better covered in our debate on clause 1 stand part than on amendments 1 and 23.
It was lovely to have the hon. Member for North Swindon get up and take part in this debate. I hope he will not be intimidated and will be a regular contributor on other occasions. I had a sense of Don Quixote and his trusty, loyal servant Sancho Panza as the hon. Gentleman defended the Bill’s principles without really getting into the issues of redistribution that we touch on in the amendments. It was rather revealing that he talked about the blunting of incentives if redistribution continued to be a significant factor; that rather gave the game away and will worry many in local government as to what this measure will mean in practice.
I was fascinated by the hon. Gentleman’s recollection of witnesses’ enthusiasm for the incentives in the Bill. Let me draw him back to the evidence we received on Tuesday from Mr Dominic Williams of the Federation of Small Businesses. Commenting on the incentives that Ministers suggest are in the Bill, he said:
“our view is that that is not really an effective incentive, for a number of reasons. First, it only applies to the development of new physical property. It is an incentive to permit more development; it is not necessarily an incentive to look after your existing business community. Secondly, throughout much of the country, particularly over the last few years, there has been very little development”.
That would suggest that the current system of 50% distribution has not produced evidence that 100% business rates retention will offer any more of an incentive. He went on:
“Thirdly, where there has been development, it has tended to be out-of-town shopping centres. The way that the system has worked since the last reform has given local authorities an incentive to give consent to out-of-town shopping centres, which take away trade from the existing town centre.”
He also said something rather revealing on incentives to work with business:
“What I think is more important is that if local authorities are correctly funded to do what they are meant to do, they will be supportive of business. If they are underfunded—I do not blame them for this—they have to put the money towards their statutory obligations and cut back on some of their discretionary activities.”––[Official Report, Local Government Finance Public Bill Committee, 31 January 2017; c. 45, Q81.]
Justin Tomlinson
It was very kind of the FSB to strengthen my case. First, 50% clearly was not enough; that is why we need the maximum incentive. On the town centre principle, I addressed in my speech how councils are only looking at car parking revenue, not the business rates collection within town centres; that strengthens my point. My final ask is that the FSB rallies its members to stand for positions in local authorities, so that they can directly influence how effective local authorities are.
Mr Thomas
As I said, the hon. Gentleman’s contribution was inspirational in terms of recalling great literature of the past and the tale of Don Quixote and Sancho Panza. The evidence from the FSB was revealing: the economic incentives will not be anything like as significant as Ministers hope and the measure will help to drive further reductions in spending power, it would appear, without any evidence from Ministers to the contrary.
Justin Tomlinson
Surely if developers were converting employment land into residential land, the council would still receive income, but through council tax rather than business rates.
Justin Tomlinson
I do not have all the figures immediately to hand, but I would be very excited about the new homes bonus money that would be released very quickly following the decision to transfer that land.