Kevin Hollinrake
Main Page: Kevin Hollinrake (Conservative - Thirsk and Malton)(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Thomas
If the hon. Gentleman will not listen to me, perhaps he will listen to Izzi Seccombe, chair of the LGA’s health and wellbeing board and Conservative leader of Warwickshire Council. Earlier this week, she said:
“To continue, it is really looking like we are cutting into the bones of services that matter to people”.
According to the LGA’s analysis, 147 of England’s 151 social care authorities are considering or have had approved the introduction of the social care precept for next year, but it estimates that that will raise just over £540 million, which does not even cover the cost of the Government’s national living wage. It will not tackle either the growing crisis in services available to support the elderly or disabled or end the need for cuts to local services, including social care, such is the funding crisis.
Kevin Hollinrake (Thirsk and Malton) (Con)
The hon. Gentleman referred to the needs within different local authorities. Does he accept that some local authorities are under greater pressure than others? For example, 13 London boroughs were able to reduce or freeze council tax in 2016-17, while many others were not. Is he advocating a system based purely on cost drivers, need and the cost of delivery, rather than regression and the baked-in formulas of previous years?
Mr Thomas
The hon. Gentleman will remember that he and I had this discussion many times during our sittings on the Local Government Finance Bill. While the hon. Gentleman seeks to champion his constituency, which is a rural area, I gently suggest that he might like to talk to Ministers about why they intend to abolish the rural delivery services grant, which was specifically introduced to help provide additional funding to rural areas such as his.
Kevin Hollinrake
The hon. Gentleman knows very well that this is happening in a context of much more money coming into the system—an extra £12.5 billion into local government by 2020. That is the relevant context, rather than what he says about withdrawing funding from local authorities.
Mr Thomas
Given the scale of the funding crisis facing local government at the moment and the abolition of other funding streams such as the £3 billion going from the public health grant, I suggest that the hon. Gentleman should be a bit more of a champion for rural areas and try to defend his own area’s funding through the rural delivery services grant.
Kevin Hollinrake
I represent a constituency in north Yorkshire, an area with eight local authorities. There are eight chief executives, eight economic development officers, and eight directors of finance. That cannot be right; we need to remove tiers of bureaucracy and reduce costs in order to maximise the use of our resources.
Anna Soubry
I could not agree more. My hon. Friend makes a compelling point.
Broxtowe Borough Council has done a terrific job, and I pay credit to the previous authority, run by Labour and the Lib Dems, which started the sharing of back-office functions. Obviously I take the firm view that the new Conservative-run council is even better—[Hon. Members: “Hear, hear!”] I genuinely believe that it is, notwithstanding the unfortunate position that it now finds itself in. I shall address that point in a moment; my speech will not be all roses, as you can imagine, Mr Deputy Speaker. We are here to represent all our constituents, and we are also here to represent our hard-working councillors.
Broxtowe Borough Council—now Conservative run—has continued much of the good work on sharing back- office functions, but as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) says, there is only so much that such councils can do. Broxtowe continues to carry out such functions, but we are now going across borders and sharing functions with Erewash and, increasingly, with Rushcliffe. I have already told the leader of our borough council, Councillor Richard Jackson, that I am slightly worried about that. He shares my view that we should move to a unitary arrangement. That is brave of him, as the leader of a borough council—he is also on the county council—but Conservatives are increasingly being brave and considering whether going unitary would be better. If they are to make that advance, however, they will have to work even more with other authorities in the county rather than crossing the border into Derbyshire. So Broxtowe Borough Council is sharing back office duties, but as my hon. Friend said, there is only so much that it can do. Let us look at planning. No disrespect to all my great planning officers, but in reality we need one unitary authority to deal with important planning matters.
I shall turn now to the difficulties that Broxtowe undoubtedly faces. Because of the settlement, Broxtowe Borough Council will lose around £380,000 in 2017-18, and a total of £1.18 million over the next three years. That equates to an increase in council tax of about 5%. We must bear in mind that one of the reasons why the Conservatives came into power in 2015 was our promise not to increase council tax. Broxtowe does not want to put up council tax but it faces a big drop in its income in the coming years. The council, and Councillor Richard Jackson, are agitated even more by the short notice that has been given of the settlement. He told me that the administration had
“hardly any time to plan for the reductions that will be needed”.
It has had only a few weeks in which to balance next year’s budget.
It is tough to say this, but the reality is that all our local authorities are increasingly finding themselves in financial difficulty. They have a desire to deliver excellent services, but the amount of money available to them—notwithstanding the good work that so many of them have done to reduce their costs—is putting a strain on their ability to deliver the first-class services that they are determined to deliver. I make this plea on behalf of Broxtowe Borough Council. It has accepted this cut, which will be difficult—the Secretary of State was good enough to arrange a meeting with representatives of the council, and we are grateful for that—but enough is enough. Really, these must be the last such cuts to good local authorities such as Broxtowe.
I want to turn now to business rates. Having had the pleasure of working with the Secretary of State for 12 months and more, I have absolutely no doubt that he understands the needs, the pressures and indeed the joys of running a small business. He gets that—of course he does—and I am proud that we did so much in our time together to improve the lot of small businesses. However, I have big concerns about business rates. Now is not the time to go into all that, but in my view, it is a bad system. It is inherently unfair. No matter how much money a business makes—or, indeed, loses—it still has to pay its rates, and that is absolutely wrong. A business could occupy a certain space and have only a couple of people working in it, but it could be making millions of pounds in profits because it provides an online service. However, that very same space could be a shop on one of our great high streets, which are frankly struggling. We all want our high streets to thrive. The shop might employ three or four people and have a much smaller turnover, but its rates will be exactly the same as those of the multimillion-pound business in the same space. I am sorry, but that is not fair. As I said, now is not the time to discuss this, but I think the Government get the issue. The trick is to find an alternative that still raises the same amount of money, which I accept is difficult.
Mr Clive Betts (Sheffield South East) (Lab)
The obvious point is that there is no change from the provisional settlement. We are talking about the same figures as the Government presented to us a few weeks ago. It is difficult to imagine that nothing any local council has said in that time has been relevant to its financial circumstances to the extent that Ministers feel the need to respond in some way. That is the case: no change whatever to the initial proposals.
The settlement therefore represents a continuation of the cuts that began in 2010. I welcome, as I have previously, the four-year spending settlements being given to councils. The settlements are a helpful step forward that local government has also welcomed in general. This is a cash-flat settlement over a four-year period, which therefore means a continuation of cuts because cash buys less over a four-year period not merely because of inflationary pressures, but because of the additional pressures on services from the growing number of elderly people and the extra pressures of the Care Act 2014 and the Children and Families Act 2014. Local authorities are having to absorb all those pressures within the cash-flat settlement.
The Comptroller and Auditor General, Amyas Morse, has figures showing that the spending power of local authorities, in real terms, reduced by 25% between 2010 and 2016. He has also said that there will be a further 6% reduction up to 2020. Amyas Morse says that the cuts are continuing.
Furthermore, it is very clear that local government has received bigger cuts over a longer period than any other service provided by Government—far bigger than any service provided by any other central Government Department. The reality of the situation is that no other Department has had cuts on this scale, and that cannot be challenged because those are the facts.
The Local Government Association has said that, by 2020, at the end of the spending review period, there will be a gap of £5.8 billion. That is the LGA’s figure, and I know that some people will say, “Well they would say that, wouldn’t they? They want extra money.” Those people might be right, but there may be demands on service provision that cannot be met by the agreed funding settlement.
All I ask of the Secretary of State and the Minister is that they please think carefully when the time comes to make decisions about the scheme for 100% business rate retention and about allocating the extra £11 billion to £13 billion. The Local Government Association is clearly saying that the first call on those resources should be the existing services that cannot be funded with local government’s existing money. That is a fundamental point.
I hear what Conservative Members are saying about getting the needs assessment right. One of my Select Committee colleagues, the hon. Member for Thirsk and Malton (Kevin Hollinrake), is nodding in agreement. The Committee is considering the needs assessment, and we have commissioned work on that, too, but it is no good getting the needs assessment right on the allocation of resources to individual authorities if, at the beginning of the process, we get it wrong on the overall needs of local government as a whole. That is why we need to take particular account of that demand.
My local authority in Sheffield faces challenges next year. It is saying to me that there will be another £23 million cut in revenue support grant; that it will need to make £40 million of savings to meet inflation and the extra demands that it, like any other council, has to deal with, particularly those relating to social care; and that all that will mean reductions in the standard of service provision across the board. It will try to protect social care, but that means less money for other services, such as parks and open spaces, on which the Select Committee has just published a report that shows the stresses and strains on those services.
Social care has rightly been given a lot of attention. Along with the Chairs of the Health Committee and the Public Accounts Committee, I wrote to the Prime Minister to ask for an all-party review of long-term social care funding needs. That still needs to be done; we have to reach a new settlement because the existing system clearly does not work. We have to make the best of it for the time being, but we need to reach a general agreement on something more substantial for the longer term that will stand the test of time, so that review still needs to be done.
Let us look at the immediate situation. The LGA is saying that there will be a £2.6 billion deficit in social care funding by the end of this financial settlement in 2020, and that £1.3 billion of that is here and now. Despite the Government’s proposal to increase the precept by 3%, and the cut in the new homes bonus to allow for extra social care grant, the LGA is still saying there will be a £1.3 billion deficit next year. The Select Committee is currently conducting an inquiry into social care. We will be producing reports in due course, so it would be wrong of me to prejudge the outcome, but I can say that we have had evidence from the King’s Fund, the Nuffield Trust and the Institute for Fiscal Studies, and all gave similar figures about the current funding gap. They may disagree by a few hundred thousand pounds, but essentially they all say there is currently a gap in the money local authorities have available for the provision of adult social care.
Kevin Hollinrake
The Chair of the Select Committee spoke earlier about a long-term solution for adult social care. He and I went to Germany to look at the care system there, and we were both impressed by how it had achieved cross-party consensus on a future solution for adult social care. Would he advocate our looking at this on a long-term, cross-party basis?
Mr Betts
Absolutely. The system in Germany may not be one that we could immediately transfer over here, but the people there said to us that 20 years ago they sat down and dealt with this on a cross-party basis and got cross-party agreement. They are now having to put up their contribution rates, but they are doing so with cross-party agreement and with general public support because they have in place a system that is standing the test of time. That is an example of how to do it. Even if we end up coming up with a slightly different solution, we should at least look at the method they used to reach that agreement so that we can put in place a system that stands the test of time. The hon. Gentleman is absolutely right on that.
The Government have given local authorities the right to increase the precept by 3% in the next financial year, and I welcome the fact that most have chosen to do that. There are problems with council tax—it is not the most progressive of taxes and we could make some reforms to improve it—but in the end, local authorities, faced with the prospect of not having enough money to pay for their elderly people, have explained to their council tax payers why an increase is necessary, and have then taken the difficult decision to do it. That is absolutely right, and they should be congratulated on that.
Nevertheless, the £543 million that the LGA estimates is going to be raised by the precept will just about cover the cost of the increase to the minimum wage, or the national living wage, as the Government call it. In other words, the money has gone straight out the door in extra pay. It is absolutely right that it goes to low-paid workers who in most cases do a superb job—they are under great stress and strain to deliver that care, so it is absolutely right that they get more pay—but the reality is that the money raised by the precept is not even going to sustain the current level of social care, given the extra demands.
Let me just mention the cut in the new homes bonus. Although I live in Sheffield, which is a unitary authority, I do reflect on the issues facing two-tier authorities. County councils, for example, are getting extra social care grant, but the money is coming from the budgets of the district councils and the cut in the new homes bonus. The new homes bonus was not officially part of the four-year settlement, but for the smaller district councils, which had factored it into their future plans, it came as a considerable financial shock to the system to have a whole element of it removed, and it was a very difficult thing to address at short notice. I have a lot of sympathy for councillors and their officials in those small district councils who are struggling as a result of this change, as it creates the very uncertainty that the Government were trying to remove with the creation of a four-year settlement, and that is something on which we should all reflect.
Let me reflect on one or two comments that have been made by Amyas Morse, the Comptroller and Auditor General. I do not know whether Members have read his article in which he talks about social care, cuts in funding, and the NHS. He refers to a lack of “joined-up thinking”. He talks about central Government making decisions. It might be appropriate for me to read the words that he uses. He says that it is easy to allocate savings
“to be made by those operating outside a department’s boundary or with a different mandate, without necessarily understanding their effect.”
In other words, Government Departments are allocating savings for someone else to make without understanding their impact. It sounds horribly true when it is put like that. He talks about central Government being slow to adjust, often acting only when serious failure occurs.
It is a very interesting article, because Morse talks about local councils initially responding to those cuts with efficiency savings—I know that Government Members have called for more efficiency savings from local councils. Morse then goes on to say that that is okay at the beginning, but, over time, while councils could initially respond with “more for less”, we have now got to the point where it is “less for less.” He says that
“during this progressive reduction in funding, I have not seen any evidence-based effort to reconcile funding to local needs. In my view, the policy objectives for local government and the local government statutory duties have not been properly weighted against potential efficiency savings.”
He goes on to say that although local authorities have tried to protect social care, there has, nevertheless, been a 7% reduction in real terms, and that
“Besides the direct effect on care service users, this reduction has a deleterious effect on the NHS... Costs are effectively being shunted from one part of the connected system to another.”
He is blaming not local councils for that but central Government for having got it so badly wrong. He also says—Government Members may not be always willing to accept this—that areas with the greatest needs have lost the most. That comes from an independent review from the Comptroller and Auditor General.
The Comptroller and Auditor General goes on to say:
“Central savings may have been secured, but significant damage has been done.”
Again, that is from a senior official looking at the public accounts of this country. It is a damning indictment of what has happened with regards to cuts to social care—I am talking about the impact on users and the knock-on consequences and damage to the NHS, including bed-blocking, which is a horrible term that I do not like. Basically, this is about elderly people who need to come out of their bed in hospital and receive care in the community not getting that care because it simply is not available. There are also individuals who could, with earlier prevention, have avoided going into hospital in the first place, but that earlier prevention is not there either.
Finally, all my sympathy goes to the Secretary of State on the issue of business rates. The revaluation is simply about re-allocating the total payment to different businesses. It reflects the changes in the prosperity of different parts of the United Kingdom since the last revaluation seven years ago: businesses in more prosperous areas with greater growth will find that their rates go up, while others will find that their rates go down. I understand the point that has been made: this is not a way of raising extra money but of reflecting the different changes in prosperity in different parts of the United Kingdom over the past few years.
I welcome what the Secretary of State has said about looking again at how the money raised is balanced between, say, a shop in the high street and a business on an out-of-town retail park, or between a retail business that sells directly to the public and an online business that probably has far lower rates. It will be interesting to see what the Government propose.
Although I disagree with many items in the funding settlement, I say to the Secretary of State that if the Select Committee can help to look at the issue of how business rates reform could take place to reflect more properly who should be paying what in the system, we will be more than happy to work with him.
James Heappey (Wells) (Con)
In Somerset, local government looks pretty small. In the 600 or so square miles of my constituency, there are six, gusting seven bus routes, one of which is under threat at the moment. There is one train station, and library opening hours and bin collections have been reduced. There is a limited number of small road improvement schemes and absolutely no major road improvement schemes. There have been cuts to drug advisory services and youth clubs and there is less funding to support the elderly in their homes and communities.
In return, there is a higher precept for flood protection and adult social care, and higher council taxes. I make no criticism of Somerset County Council, which froze council tax for six years when household incomes were tightest, helping families across the county. Furthermore, it was saddled with the reckless debts of the Lib Dem administration. None of that party’s Members can be bothered to turn up for a debate today on local government finance—presumably because they are too busy in the other place turning their backs on democracy instead of standing up here for the communities that they still pretend to represent. That administration racked up debts of £350 million when it was running Somerset County Council. That means that millions of pounds every year from the council’s budget is spent on the interest of those Lib Dem debts.
All that is happening while petrol prices are rising in rural areas—they are rising everywhere, but in rural areas the impact on the cost of living is felt more quickly. For my many constituents who live off the gas grid, heating oil prices have gone up. My constituents pay the same as those who live in cities for their mobile phone and broadband contracts, yet get a fraction of the functionality and connectivity. Their house prices and rents are well above the national average yet their wages are well below it. It seems so unfair that the solution the Government have come up with for reducing local government funding, widening the gap between urban and rural, is to increase the council tax burden on those living in rural areas when their cost of living is already, in so many cases, so much higher than elsewhere.
Last year, the already unfair gap in funding between urban and rural areas would have widened had it not been for the last-minute intervention of the then Secretary of State, who put in place an interim grant so that rural and urban funding, although being cut, would be cut by the same across the board. But that interim grant did nothing to correct the trajectories of those cuts, so that this year the gap between urban and rural widens by just as much as it was always intended to do. That brings with it no reflection of the cost of rurality or of an ageing demographic, and no reflection of our limited ability to grow our economy, given the lack of connectivity and the size of the working-age population as a proportion of the population as a whole.
Somerset County Council and the district councils in our area have now set their budgets for this year. Those painful decisions have been taken, so it is really all too late for this year. However, as my hon. Friend the Member for North Dorset (Simon Hoare), who is no longer in his place, said in this debate at this time last year, we have to accept that public services in rural areas have not just been cut to the bone; all the marrow has been sucked out as well.
The disadvantage for rural areas cannot continue, so I warmly welcome the announcement that the Secretary of State has made at the Dispatch Box today. The review to which he has committed is ambitious in scale and scope. This is not about claiming that rural areas should be at an advantage over urban ones; it is simply about making things fair, which requires a full understanding of the cost of delivering public services in rural areas and a formula that allocates funds accordingly. That review is urgent. I note that the Secretary of State said that it will be completed ahead of the introduction of the full retention of business rates for 2019-20, but we cannot leave it until this debate in two years’ time to be clear about the result of the review. Councils need to know the outcome of the review by this debate next year—in January 2018—so that they can know that the jam tomorrow that we have been promising throughout these difficult four years means that their retention of business rates will be baselined at x, and they can start to plan accordingly. Certainty is all they have left to ask for now that it is clear that there ain’t gonna be any more money in the near future.
So, too, must the Government set a mechanism for the ongoing review of the baselining of business rates when the business rates retention has been introduced. I am sure that the Secretary of State and his team will agree that the potential for economic development will vary from region to region, and from area to area. Considering that the economic development team—if, indeed, one is left—in many of the smaller and more hard-pressed county councils is one person, the opportunities to grow the economy are somewhat more limited. We must have an eye to the idea that once we have baselined in 2019-20, some areas, through their entrepreneurial guile, may be able to grow their economies and their rates bases more quickly than others. Therefore, there will be a requirement to reset from time to time so that the deal remains equitable. Or—I am equally happy with either solution—the Secretary of State could direct that the growth deals allocated better reflect the areas where skills, connectivity or workforce availability are most difficult.
The south-west lags behind the rest of the country on infrastructure spending, and we are well behind on connectivity and on our skills base, yet when the growth deals were announced recently, the deal for the Somerset and Devon local enterprise partnership was particularly poor. It would be great to see the growth deals reflecting the areas where the economic development challenge is greatest so that when it comes to this entrepreneurial idea of the full retention of business rates, which I wholly support, we will start with equality of opportunity because we will have the connectivity, skills and infrastructure in place.
Kevin Hollinrake
I am sure that my hon. Friend is aware that the industrial strategy White Paper refers to having regard to per capita spending throughout the country, rather than spending being concentrated in London and other regions that are getting the lion’s share at the moment.
James Heappey
I absolutely agree. There is something very empowering and very Conservative about giving councils the opportunity to be masters of their own financial destiny, and giving them the means by saying, “If you go out and attract business into your area, the rewards are yours to keep and spend on improved public services for your communities.” We just have to be aware that when we get that going, we need to have stacked the growth deals in favour of areas where the challenge is greatest so authorities really can take things into their own hands and grow their economies as keenly as the areas that already benefit from better connectivity, infrastructure and skills.
It is sad that the Chief Secretary to the Treasury and the Chancellor have already left their seats because I was going to make one other plea in order to alleviate Somerset’s problems in the short term. The Government have encouraged local authorities to do as they wish through mechanisms such as the new homes bonus and the community infrastructure levy. Not too long ago, there was an aggregates levy designed so that the minerals and aggregates that were extracted in certain areas would be taxed. Some 10% of that was supposed to stay locally in order to fund local betterment and mitigation, but it has drifted off into the centre and is no longer benefiting communities that suffer from hosting those industries. Why does that matter to us in Somerset? Well, in Somerset the Chancellor raises £24.7 million a year from the aggregates levy, and the 10% that we have lost is worth £2.47 million. That is an awful lot of bus routes, youth centres, community support for the elderly, library hours, recycling centres, bin collections, and everything else. As the Government offer the community infrastructure levy to communities that might find fracking appealing, and offer the new homes bonus as an incentive for communities who might want to host more housing, will the Chancellor let us have back the 10% of the aggregates levy that was supposed to have been the incentive for hosting quarrying?
In my constituency, we are doing an awful lot to facilitate national infrastructure projects. In Cheddar valley, the lorries going towards Hinkley Point now number more than 300 a day as it has gone on to 24-hours-a-day building. The pylons that National Grid will soon need to build to connect Hinkley into the national grid will roll through my constituency very shortly. All that building work means that all those quarry lorries are having an impact on our roads, causing potholes and congestion. Yet we are getting zero in mitigation while also getting a very poor deal on local government finance.
Public services in Somerset are being squeezed right down, but the adult social care requirements will continue to grow and grow. We should not see libraries, bus services, support groups and day centres as things that can simply be cut in order to divert money towards adult social care. That is a false economy. Those bus routes, day centres, community support groups and libraries allow people to lead independent lives, staying in their own homes independent of the adult social care system. It is only when we make them so isolated and so lonely that we end up needing to spend more and more on adult social care.
Let us move as quickly as we can to carry out the review that the Secretary of State has promised. It is very welcome announcement for which I and, I am sure, many colleagues are extremely grateful. I have every confidence that that review will make a huge difference to rural areas, perhaps in terms of the money that we get, but much more importantly, in terms of our constituents’ perception that the system is not stacked against them—that they get a fair cut of the Government’s cash. I know that the Secretary of State wants to be bold in the scope and scale of the review that he embarks on, but I also urge him get it done this year so that when we have this debate next year we can offer our councils much more certainty on what full business rate retention looks like and what the advantage to them will be.
Robert Neill
The right hon. Gentleman is right. He and I both experienced that approach when we were Ministers in the same Government. What he has suggested is precisely the objective that we should work towards, but we need a steer from the top.
Let me make two more brief points. The first is about the fair funding review, which I also welcome, but it will need to be bold and comprehensive. When I was a local government Minister, we had to go through about 275 bits of regression analysis to establish the formula, but we had knocked it down from about 400. Such material is not comprehensible; it is extremely opaque, and it produces consequences that are often difficult to reconcile with what any of us in local government see on the ground.
May I make a plea for one particular factor to be taken into account? I understand that, inevitably, there will be a “needs versus resource” matrix, but thus far it has proved almost impossible to build into the system a proper weighting for historically efficient authorities. A local authority that has historically been efficient and run its services well at low cost receives no credit for that. If anything, such authorities tend to be penalised. Bromley, for example, is a comparatively low council tax authority, the second lowest in outer London, but it is also the lowest in terms of the cost per head—the unit costs—of its service delivery. The system has never taken account of that, and we ought to incentivise it within the system.
Kevin Hollinrake
My hon. Friend said earlier that his local authority area contained the highest percentage of the London population. Bromley’s total spending power is £795 a head, whereas Camden’s is £1,171 a head. How can that be right?
Robert Neill
The simple truth is that it cannot, although we have broken down some of the artificial barriers. The idea that there is a major distinction between costs in inner and outer London has gone. Many of the outer London boroughs now have much more in common with the inner London boroughs, socially and economically, than used to be the case.
My second point is about the business rates. I welcome what has been said about the review, and especially what has been said about transitional reliefs. I think that the Secretary of State has hit upon the key issue of businesses in high-cost areas such as mine. May I suggest that he considers putting the multiplier on to the consumer prices index rather than the retail prices index? That would be more logical. In the long term, we need to think about how we can capture businesses that do not have a large physical footfall, such as online competitors. We need to deal with the issue of out-of-town supermarkets being treated much more favourably than shops because of the way in which land values come into the equation. When it comes to transitional relief, perhaps we could move from the current sledging to something akin to the sliding scale that we apply to stamp duty land tax.
I hope that those are constructive suggestions that can be implemented in the future.
Kevin Hollinrake (Thirsk and Malton) (Con)
It is an honour to follow my hon. Friend the Member for St Austell and Newquay (Steve Double). I shall keep my comments very brief, because I have been told to do so by the Whips and by Mr Deputy Speaker when he was in the Chair earlier. My comments are simple ones. I understand that the Secretary of State has a lot on his plate at the moment, but he is sitting on a golden opportunity—a once-in-a-parliamentary-generation opportunity, perhaps—to fix two fundamental problems in the system. The first relates to fairness in the rating system. The second involves fairer funding for local authorities. In relation to rates, I must refer Members to my declaration in the Register of Members’ Financial Interests, in that we have quite a lot of shops around the UK that are subject to the rating system. I believe that a fairer system would be a sales tax. It would disadvantage my network, but it would nevertheless be much fairer.
My principal comments relate to fairer funding for local authorities. I have heard many comments from Members across the House about how this issue affects rural areas in comparison with metropolitan areas. The shadow Minister, the hon. Member for Harrow West (Mr Thomas), knows what I am going to say about this. The biggest iniquity by far is the way in which London is treated in comparison with the rest of the country. That is the reality. I am grateful to Leicestershire County Council for producing a report, which I urge Members to download, in which it has collapsed all district and county councils into one, pooled their resources and divided the sum by the number of people in those areas to give the spending power per local authority. The reality is that nine of the 10 local authorities with the highest spending power are in London, yet nine of the 10 authorities with the lowest council tax are also in London. That is simply unfair. It would be perfectly appropriate as long as the need drivers were taken into account. Let us take Harrow as an example plucked out of thin air. Harrow has £80 a year more spending power than North Yorkshire, yet it has a richer and younger population. How can that be right? [Interruption.] That cannot be the explanation, surely.
Kevin Hollinrake
I have been told not to take any interventions, but I will give way to my hon. Friend very briefly.
Jo Churchill
Would my hon. Friend concur, having looked through those figures, that rural areas also have poorer education funding, poorer police funding and poorer health spending, and that we therefore get hit on all sides?
Kevin Hollinrake
That is the central point of my remarks.
In 2016-17, 13 London boroughs either froze or lowered their council tax. That is not possible in areas such as North Yorkshire. To show that I am not just plugging rural areas, let us look at the lowest spending local authorities. We have York with £615 per head, Trafford with £639, Kirklees with £673 and Leeds with £696, and yet we have Westminster with £1,100 a head and Kensington and Chelsea with £1,168 a head. This simply cannot be right.
This is happening, as my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) said, because the system is based on what happened before. Einstein once said:
“We cannot solve our problems with the same thinking we used when we created them.”
We created the problems and we need new thinking. The simple solution must be to use cost drivers. Cost drivers can be only two things: need and the cost of delivery. It is as simple as that. The simpler the formula that we use and the more understandable it is, the more we will all buy into the system.
The fair funding review commissioned by the Secretary of State is critical. I support that method, but we need a blank canvas and a new approach to the problem. The clear opportunity is that more money is going into the system. Whatever the Opposition may say, between £11 billion and £13 billion will be going into the system by 2020 because of the retention of business rates, and there must be a quid pro quo for that. Ultimately, more money is going into the system, and it is said that a rising tide will lift all boats. It is difficult to rebalance a system when no new money is going in, but more money is going in. Spending rounds are clearly tight, and the Secretary of State will have to be careful about where that money goes to ensure that he gets bang for his buck, but this is an opportunity. However long it takes—be it five or 10 years—if we set off on the right path, we can turn a system that is fundamentally unfair into one that is fair and equitable, and that delivers fair resources to my local authorities and to those in the rest of the country, including London.