Local Government Finance Bill

Lindsay Hoyle Excerpts

Wednesday 31st October 2012 Commons Chamber

[Robert Neill]

My hon. Friend has raised a couple of important points. I shall begin with the last, if I may—and I shall not forget the other Members who wish to intervene.

We should not make the error of thinking that unitary status is always a solution. Some unitary authorities that are on the small side do not follow their natural boundaries, and their critical mass is towards the lower end of the scale in terms of economic, financial and managerial capacity. It is clear to us now that the creation of a string of fairly small unitaries was not necessarily the best solution. We should not assume that unitary is always good and two-tier is always bad. Some unitaries work and some do not; some two-tier areas work, while in others there are tensions. We need to ensure that they work better in future, and I believe that the Bill and the Lords amendments will be one means of helping them to achieve that.

My hon. Friend’s point about perception is important too. I experienced some frustration when I was first elected as a councillor in the London borough of Havering in 1974—[Interruption.] I must tell the hon. Member for Hartlepool (Mr Wright) that it was a little after the Municipal Reform Act 1835, but it was a while ago nevertheless. In those days, not only was I one of the few members of our 60-odd-strong council who were interested in taking part in the pan-London bodies that we had to have, but I was regarded as very dangerous—dangerously outward-looking—because I had stood for the Greater London Council as well. In 1974, some members of the borough council still thought in terms of the two predecessor authorities. We did not have cabinets in those days, but there was concern about whether the committee chairmen were drawn sufficiently from the Romford end or the Hornchurch end, even if they were members of the same political party. That inward-looking tendency is one of the bigger challenges that we face in dealing with local government as a whole, but attitudes have improved massively since those days in 1974, which is to local government’s credit.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I remind the hon. Gentleman that we are discussing an amendment. I know that he has been tempted away from it by the hon. Member for Bedford (Richard Fuller) and that he wishes to return to it, but I should like us to get past 1974, right up to date, and back to the amendment, on which I know that the hon. Gentleman was about to enlighten the House.

[Robert Neill]

You are, as always, the guardian of rectitude in this place, Mr Deputy Speaker, and, as you know, I am always the willing servant of rectitude in these matters. The point that I was making was that we had indeed moved on a great deal since 1974, in terms of thinking as well as chronology. The situation is better than it was. However, we still have to deal with some entrenched thinking. I believe that, by promoting pooling, the amendment can break down some of that thinking, which, as was pointed out by my hon. Friend the Member for Bedford, can spill into other areas of policy decision-making as well as those relating to local government finance. I hope that, by encouraging economic investment, pooling will make it easier and more desirable to provide the educational opportunities cited by my hon. Friend in the context of free schools. His point was well made: all the various legislative measures interact as part of a broader localism agenda.

Now I must not forget the hon. Member for Hartlepool, who tried to intervene earlier.

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[Robert Neill]

That point is slightly different from the pooling point. I was talking about the provisions that deal with the tier splits. We are returning some of the moneys—the business rate—directly to local government. That was formerly taken by the Treasury and distributed by formula grant. Some of those moneys will be needed to fund district council functions in two-tier areas, and some will be needed to fund county council functions in two-tier areas.

That highlights why there has to be a passing of money. It is collected by the billing authority; that is the case at the moment. Southend borough council and Rochford district council collect all the business rates and then have to send the money to central Government as, I think, a monthly payment. It is then returned in the local government finance settlement each year, predominantly by way of the formula grant—although there are one or two other grants, as this is a slightly complex world. We are allowing authorities to keep some of that money at the beginning, but because it has to fund two types of authority—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure the hon. Gentleman will want to address his comments through the Chair, rather than personally across the Bench to his colleague, as he is currently doing. I am also sure that he is not filibustering; I can see that there is no organisation.

[Richard Fuller]

rose—

[Mr Deputy Speaker]

I think there is about to be another intervention on you, Mr Neill.

[Robert Neill]

As you know, Mr Deputy Speaker, the last thing I would ever wish to do is filibuster. I have spent a large proportion of my life dealing with local government finance, and I wish we could explain things in one simple sentence, as that would make life a lot easier for many of us.

I have outlined the essence of the issue, and the reasons why we have references to billing authorities and major precepting authorities. There are other precepts; the parish council can levy a precept, but it is not a major precepting authority. Very occasionally, there will also be certain levies put on top, but for our current purposes we need not discuss that and add further confusion.

Usually the district council in a two-tier area is the planning authority, and it is also the billing authority. Importantly, however, for investment purposes—this is where this point links in with the question of business rates retention—the highway authority will tend to be the county council, which often has significant economic development resources that district councils do not have, and the education authority will be the most significant body for the skills agenda and in attracting the required work force. That is why pooling makes sense. It links the pooling of resources with pooling and collaboration on a raft of issues, which is essential in the modern world.

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[Robert Neill]

I will be delighted to take responsibility for my hon. Friend’s arrival in this House.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I say to the hon. Gentleman that we do not need to rehearse the CV of any Member. Furthermore, I am worried that Members may become more confused about the issues in hand after his detailed explanations. We must now address the amendment alone, and not embark on a tour of the country.

[Robert Neill]

I entirely agree, Mr Deputy Speaker, and the point of the amendment is—

[Mr Deputy Speaker]

Order. Let me reiterate that we will now deal with Lords amendment 1 and we will not be distracted from that.

[Robert Neill]

Lords amendment 1 is important because it enables pooling, and pooling is one reason why irrelevances such as unitary reorganisation need not trouble the Government in the future.

[John Hemming (Birmingham, Yardley) (LD)]

I represent a Birmingham constituency. The local government structure in the area arises from the fact that the West Midlands county council was abolished in 1985 and three functions were dealt with separately: the police and the fire service are now precepting authorities, while the integrated transport authority—it used to be the passenger transport authority—is not a precepting authority. In terms of encouraging economic development, therefore, there is a key question as to whether pooling serves to improve transport. Will the Minister comment on—

[Mr Deputy Speaker]

Order. The hon. Member for Bromley and Chislehurst (Robert Neill) is a former Minister; he is not still a Minister. Also, interventions need to be shorter. If Members wish to speak, they should put their name down, and I am sure we will be able to accommodate them.

[Robert Neill]

My hon. Friend makes a fair point. When seeking clarity on these matters, we are sometimes bedevilled by history. A passenger transport authority would, I suspect, be a levying authority rather than a precepting authority for the purposes under discussion. At present, it would not necessarily fall within the scope of this pooling. It is important to raise such topics, however. There must be a means whereby the pooling of retained business rates includes incentives for transport authorities. In Greater Manchester, the solution has been the creation of a joint authority. There might be merit in considering a similar solution in Birmingham. I am sure the Minister will take that point on board, and I ask him to address it in his concluding remarks. It is also worth pointing out that if there is a large amount of money in the business rate pool, more money can, of course, be leveraged into investment, particularly for infrastructure purposes—and infrastructure investment is precisely what authorities want.

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[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I know that the hon. Gentleman wants to deal with Lords amendment 1. I am sure that Lord Heseltine will not lose any sleep over his comments, so perhaps we can get back to the amendment.

[Mr Jackson]

I was meandering among the ash trees of Lord Heseltine’s arboretum, Mr Deputy Speaker, and—

[Mr Deputy Speaker]

Order. I hope that the hon. Gentleman will get out of the wood and on to the subject in hand.

[Mr Jackson]

We must respect the unique nature and authenticity of local government. When my right hon. Friend the Chancellor reads the report and teases out its nuances, I am sure that there will be more with which he agrees than with which he disagrees.

The context of centralising business rates was the desire to give a break to businesses, which often encountered difficulties dealing with local authorities that were not business-focused and did not make protecting the interests of individual workers in growing businesses a priority, which was especially the case in places such as Liverpool and Manchester.

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[Mr Clive Betts (Sheffield South East) (Lab)]

I note the Minister’s support for the concept of pooling. It is right that if local authorities choose to bring their capacities together, they should be allowed to do so. Does that not rather contrast, however, with the Government’s response to the Select Committee’s report on housing, in which we suggested that local authorities might be able to pool their capabilities to borrow under their housing revenue account—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Betts, I do not know how long you have been in the Chamber. I presume you have not just come in. That was a very long intervention. I am sure the Minister will recognise the question that you have posed to him already. I take it that you had finished the question, as it was so long.

[Mr Betts]

Yes.

[Mr Stewart Jackson]

I take this opportunity to congratulate my hon. Friend on his appointment as a Minister, with his great experience as leader of Brentwood borough council. I agree with his point that local enterprise partnerships are based on authentic sub-regional and local economies. Does he see a time when it might be possible to try to—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sorry. We must have shorter interventions. I cannot say that to Members on one side of the House without saying it to those on the other. I am sure the Minister has grasped the question.

[Brandon Lewis]

My hon. Friend the Member for Peterborough mentioned in his speech—

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[Helen Jones (Warrington North) (Lab)]

I beg to move amendment (a) to Lords amendment 3.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss Lords amendment 16, amendment (a) thereto, and Lords amendments 18 and 83 to 90.

[Helen Jones]

Amendment 3 was moved in the other place by my noble Friend Baroness Hollis of Heigham. It calls for one very simple thing: a review of how the new system for council tax support is working three years after the Bill as enacted comes into effect. We tabled amendment (a) to make clear the original intention of the amendment in applying only to England because this is a devolved matter in Wales. When my noble Friend introduced the amendment in the Lords, she made a clear and persuasive case that was supported by a good majority.

The Government opposed the measure at the time, but I understand that they may now decide to accept it; the Minister will tell us. Opposition Members may wonder why that is, but in fact, we know why. The Government know that their policy on council tax is a shambles. It is so bad that they cannot even convince their own Members to support it. Their councils in North Yorkshire, including the Foreign Secretary’s council, have campaigned against its unfairness. The departmental Secretary of State’s own county council says that it has major implications for some of the most vulnerable members of the community. West Oxfordshire, the Prime Minister’s council, has refused to implement any scheme at all and will rely on the default scheme. Westminster, the Tories’ flagship local authority, which we hear so much about, says that it will not implement it because residents are already adversely affected by changes to local housing allowance and other benefit cuts. This is what Westminster said in one of the documents that it submitted:

“The previous Community Charge (Poll Tax) experience shows that there are inherent difficulties in asking benefit claimants to pay small sums of Council Tax. This can make the debt difficult, and in some cases uneconomical, to collect.”

It also says:

“A decision to pass on the funding cut to claimants would be a reputational risk for the Council, as residents will perceive the cut as a local authority decision (rather than a central government given benefit cut).”