Local Government Finance

Kate Green Excerpts

Wednesday 22nd February 2017 Commons Chamber

[Sajid Javid]

I very much agree with my right hon. Friend. I shall in a moment discuss the fair funding review, which is an attempt to do just that.

The measures can broadly be grouped into three areas, which I shall go through during the debate. Later, I would like to update the House on another important source of Government funding for local authorities: business rates.

The first request we have had from local authorities is for increased certainty about funding. For years, councils have called for the tools to improve services and deliver efficiencies over a longer horizon. That is why the 2015 spending review delivered a £200 billion flat cash settlement for local government and why we have delivered four-year funding allocations that provide the financial certainty required for councils to be bold and ambitious. They have used that funding certainty to publish long-term efficiency plans, showing their taxpayers that they can deliver great services and still live within their means.

The story does not end there, though. Last month, we introduced the Local Government Finance Bill, which will devolve 100% of business rates to local government and enshrine in law our commitment to providing funding certainty by establishing a legal framework for multi-year settlements. The revenue support grant will be abolished, so councils will become financially self-sufficient. With services financed locally, councils will be even more accountable to their electorates, rather than to Ministers in Whitehall.

[Kate Green (Stretford and Urmston) (Lab)]

The Secretary of State says that councils are living within their means, but Trafford Council, for which I am the Member of Parliament, is having to draw on its reserves to meet the spending gap it faces as a result of the reduction in the revenue support grant, which, even in a rich authority like Trafford, is not fully compensated by the ability to retain more business rates.

[Sajid Javid]

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Brigg and Goole (Andrew Percy), who has responsibility for local growth, met Trafford Council recently. I meet many councils myself and listen to some of their challenges. Trafford Council is one of the authorities that is implementing some efficiencies, but there are always more things that can be done, some of which I shall highlight later.

--- Later in debate ---

[Sajid Javid]

My hon. Friend makes an important point about the challenges that businesses, particularly those on the high street, will face in areas such as Bromley. I would be more than happy to meet the leader of his council and other local representatives to learn more about those challenges.

Property-based business taxes have been around in one form or another for many decades—centuries, even. Nobody would argue that the current system is perfect, and it is right to ask whether the time has come for some kind of reform. The Treasury’s 2015 consultation showed little appetite for replacing the whole business rate system. It remains a vital part of the local government finance settlement, and its importance will only increase with the introduction of business rate retention. However, with underlying concerns about globalisation, international tax structures and the struggle between the high street and the virtual world, there is clearly room for improvement. We will look closely at all possible steps to make the system fairer and more sustainable in the short and long term.

[Kate Green]

I welcome what the Secretary of State says about a review. I am sure he will be interested to know of research conducted recently by Revo with intu shopping centres, which showed that business rates were the single largest deterrent to foreign retailers establishing or expanding in the UK. Would he be willing to meet the researchers behind the report to discuss, in the context of the review, what can be done to ensure that the UK continues to be an attractive destination for foreign retailers?

[Sajid Javid]

I want to listen carefully to anyone—any business, individual or Member of Parliament—who has concerns to bring me about the business rate system. I have talked about some of those concerns. The hon. Lady talks about issues to do with foreign retailers and others, and I will gladly look at them. If she wants to furnish me with more information, I will be happy to look at it. I want to make sure that we deal with these challenges. I think we all agree that the tax is not perfect, but it serves an important purpose in funding public services, and we must always look at how we can improve the situation.