Lord Barwell
Main Page: Lord Barwell (Conservative - Life peer) Local Government Finance Bill
Lord Barwell ExcerptsMonday 23rd January 2017
(7 years, 10 months ago)
Commons ChamberRead Full debate Local Government Finance Bill 2016-17 Read Hansard Text
The Minister for Housing and Planning (Gavin Barwell)
As several hon. Members have kindly mentioned during the debate, today is my 45th birthday. It is not a cause for celebration on my part, but what better way to numb the pain than to attend a debate on local government finance? For nearly 24 of my 45 years, I have been interested in housing and local government policy. In all that time, there has been a very strong call for local government to move away from its dependence on central Government grants.
The Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), for whom I have very great respect, asked whether the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), was justified in saying that this is a revolutionary measure. I think it is: it is a big step change in reducing the reliance of local government in this country on central Government. Will it solve all the problems? No, of course it will not. There will still be arguments about the overall level of resourcing and the distribution among local authorities. However, I remind all Members of the House to read the briefing we have received from the Local Government Association, which says that the central measure in the Bill has long been called for by local councils.
The hon. Member for Harrow West (Mr Thomas), who spoke on behalf of the Opposition, suffered a bit of amnesia on the Labour Government’s record in office on devolution. None the less, it was very good to hear that the Opposition Front Bench support the measures in the Bill in principle. He was right to say that the Bill is part of a wider package that is very important in terms of what will be devolved to achieve the fiscal neutrality of its measures, on which the Government are consulting at the moment, as well as the distribution of the funding that will ensure a fair settlement for all local authorities and the issue of providing a safety net in case any authority faces a sudden decline in its income.
I will just make a few points in that regard. The hon. Member for Manchester, Withington (Jeff Smith)—he is not in the same place as he was earlier—asked us to forgive him his scepticism. I certainly do forgive him. I think scepticism of all Governments over the years on these matters has probably been justified. However, we cannot legislate for fair funding. The relative needs of various parts of the country are going to change over time—the Chairman of the Select Committee made that point very powerfully—and we cannot legislate for that, but we are absolutely determined to get this right. At the moment, we have two approaches to taking forward the detail and making sure that we address the concerns that Members on both sides of the House have expressed. We will pilot the arrangements, and two hon. Members —my hon. Friend the Member for St Austell and Newquay (Steve Double) and the right hon. Member for Knowsley (Mr Howarth)—represent areas that are piloting reforms. We also have a very important steering group with the Local Government Association, and it is working with local government to try to get the details right.
Mr George Howarth
Although the pilots are welcome, I made the point earlier that the Liverpool city region—it is one of the pilot areas, as the Minister has said—has had no consultation whatsoever by the Government on how they want to proceed with the pilot. Does he not think that we could do with a bit more detail before we get to the Committee stage so that we can judge what the likely outcomes will be?
Gavin Barwell
The Secretary of State has just told me that he has discussed the pilot with leaders in the city region and my officials have told me that there have been some detailed discussions. It is certainly true that not all of the points have been dealt with yet, but I will happily write to the right hon. Gentleman to provide him with some reassurance.
I will deal with some of the points that colleagues have made. My hon. Friend the Member for Christchurch (Mr Chope) talked about local government reorganisation in Dorset and what the position might be there. I can tell him that it would be possible to set one level of council tax from day one, but in previous reorganisations a period has been allowed for council tax rates to equalise. He asked about the pooling arrangements set out in the Bill. We intend to consult local government about those arrangements, but the reason for the change is that the current arrangements have led to some local authorities being left out of what would have been logical arrangements, and we should not allow that to continue. He also made the point that we are looking to implement these reforms in the last year of the four-year settlement. That is true, and we made that clear at the outset when we set out the settlement.
Gavin Barwell
If my hon. Friend will allow me, I will make a bit of progress, because I have a lot of points to respond to.
The Chair of the Communities and Local Government Committee, the hon. Member for Sheffield South East, said that he would like authorities to be given the freedom not just to reduce the multiplier but to increase it. That would certainly be the easy way to raise more income, but Conservative Members believe that the way to raise more income is to grow the local economy, and we are trying to provide incentives for local authorities to do that.
The hon. Gentleman made the crucial point that if resetting were done too often, the incentive for growth would disappear, but if it were not done regularly enough, there would be a danger of authorities falling behind. I can confirm to him that we will look to adjust the needs baseline every time we reset—that is a crucial part of the reforms. We may also need to look at the mix of measures that have been devolved to make the package fiscally neutral, because as he said, demand for services may grow more quickly than the income from the tax base. Those issues will have to be looked at each time.
My right hon. Friend the Member for Cities of London and Westminster (Mark Field) spoke powerfully about the unique constituency that he represents, for which he is such a powerful advocate in the House. He talked about the huge potential for income there, but also the real challenges that his local authorities face.
My hon. Friend the Member for Northampton South (David Mackintosh) made a good point about ensuring that there is an incentive for local authorities to help small businesses, from which they might not get a business rates income. The Government’s hope, and I am sure that of his local authority, is that small businesses will grow to become medium-sized and larger businesses, so that the incentive will still be there in the longer term.
My hon. Friend the Member for South Dorset (Richard Drax) made an important point about the appeals system for business rates. At the moment, local government bears a significant part of the risk of appeals. One of the reforms in the Bill that the Local Government Association has welcomed deals with that issue, so that the risk does not sit with individual local authorities. Clearly, with 100% retention that risk would be significantly increased, so we have sought to address the issue that he is concerned about.
My hon. Friend the Member for Cannock Chase (Amanda Milling) raised the issue of the safety net and referred to an example in her constituency that I believe she has raised with Ministers a number of times. At the moment, in the 50% retention system, there is a safety net at 92.5% of assumed income. As part of developing these reforms, the Government will need to give thought to what the arrangement should be under 100% retention. She is absolutely right to flag up the importance of protecting authorities that face a sudden large loss in their income.
Amanda Milling
Given that the intention is to phase out coal-fired power stations between now and 2025, what will the Government do to work with local authorities that will face closures over the coming years?
Gavin Barwell
There are two issues here—making sure that the arrangements that we have in place cater for circumstances in which there is a significant loss in a local authority’s business rates income from one financial year to the next, and giving advance warning of the timing of closures so that local authorities have time to prepare appropriately. Perhaps my hon. Friend may wish to have discussions with the Under-Secretary of State, my hon. Friend the Member for Nuneaton, as the proposals go forward.
Mr Jim Cunningham
The Minister mentioned the fact that the Government want to grow local economies through the measures in the Bill. One problem as a local economy expands is the shortage of housing. If the private sector cannot cope, why do the Government not take the shackles off councils and allow them to borrow to build council houses, so that they can take the pressure off mortgages?
Gavin Barwell
The hon. Gentleman tempts me on to my pet subject. If his argument is that we need to build more homes in this country, I absolutely agree with him, and so does the Secretary of State. There will be a White Paper shortly with a package of measures to encourage all sectors to build more homes, but I point him to the announcement that the Chancellor made in the autumn statement of a further £1.4 billion for the building of affordable housing. The commitment of the Secretary of State and myself on that issue is clear.
The hon. Member for Great Grimsby (Melanie Onn) and my hon. Friend the Member for St Austell and Newquay referred to the measures on rate relief for public toilets. Indeed, there was quite a lot of toilet humour during the debate. Because I am not at home for my birthday, my children are watching, so I will keep it clean. I simply point out one thing to the hon. Lady. She asked whether, if public toilets were closed, the relief would still apply—whether they would still be liable for rates. The answer is quite complicated: they might still be rateable—so there is a potential for a charge—but unoccupied properties with a rateable value below £2,000 do not pay business rates, so they might fall below that threshold. If they are above it, the powers in the Bill would be applicable. I hope that that gives her the detail she was looking for.
My hon. Friend the Member for Torbay (Kevin Foster) spoke powerfully about the pressures on coastal communities and made a plea that, as we look at the fair funding review, we make sure that those particular pressures are taken into account. I know that other hon. Members will share his concern, and I thought he made his points very forcefully.
My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) spoke incredibly powerfully and showed a real understanding of the detail of local government finance. I have heard it said that when Einstein published his general theory of relativity, for a number of years only two or three people around the world understood it. I think the local government finance system is similar in that regard, but it sounds like my hon. Friend is one of the two or three. He talked about regression—the fact that the formula is not based purely on an assessment of need but takes past spending patterns as a proxy for what is needed—which means that to some degree the political decisions of different authorities have an impact. I think he was arguing that we move away from that, which is absolutely something we can look at as part of the fair funding review.
My hon. Friend the Member for Somerton and Frome (David Warburton) spoke powerfully about the importance of the measures on a rural rate relief. He is a great champion for rural communities, and we are pleased to include this measure; it will ensure that rural small businesses get the same treatment as small businesses in other parts of the country.
My hon. Friend the Member for Wells (James Heappey) spoke powerfully not just for his own constituents but for rural communities across the country in trying to ensure they get a fair deal from the fair funding review. The House considered this issue last year, and I know that he and the Secretary of State feel strongly about it, but we need to get the detail right and ensure that the formula takes account of the needs of all communities, whether inner-city areas, suburban areas such as the one I represent or rural communities, and ensure that they all get a fair deal out of the system for determining finance.
The final Back-Bench speech was from my hon. Friend the Member for Waveney (Peter Aldous). He made several points but one in particular bears repeating: about the importance of implementing the fair funding review at the same time as we extend business rates retention to 100%. It is clearly essential in those circumstances to ensure an equitable distribution of the income that local government as a whole raises through that tax. That was an important point.
The hon. Member for Oldham West and Royton (Jim McMahon), who wound up for the Opposition, made two points that are worth my picking up on briefly. He spoke rightly about making sure that the system prevents those communities from sinking that, for whatever reason, cannot raise additional funding from growth and might therefore find themselves deprived of income, which could become a self-replicating cycle. The Government want to address that in several ways. For one, we want to make sure that we get the system for local government funding right, but it will not have escaped the House’s attention that earlier we heard about an industrial strategy from a Government determined that all parts of our country benefit from the economic growth we are delivering. It is again worth looking back at the record of the Labour Government and their failure to do that. We do not intend to repeat that mistake.
The hon. Gentleman made one final point about local government finance. I want to make it absolutely clear to him that nobody on the Government Benches thinks that every single community in the country should have the same level of funding per head. We absolutely recognise that funding should be based on need. Let me give him a statistic: his own local authority has a spending power, per dwelling, of just under £1,900. In the Prime Minister’s community, that figure is just over £1,300, so his constituents are getting a spending power that is nearly 50% more to reflect the fact—quite rightly—that there are extra needs in his community. I want to make it absolutely clear on behalf of the Government that we are committed to a fair system that reflects need.
It is probably worth putting on the record some of the other things that the Bill does that have not received the same attention in the debate. The pooling arrangements and the possibility for groups of local authorities essentially to replicate enterprise zone policy is a really important measure. Some mention has been made of the powers in the legislation for the Greater London Authority and for mayoral combined authorities to levy a 2% supplement on business rates, if local business has been consulted, to fund new infrastructure. Again, this tempts me into my role as the Minister for Housing and Planning, but the Secretary of State and I are both convinced that if we want to see not just economic growth, but the housing that we desperately need, putting in place the right infrastructure is absolutely critical.
As constituency MPs, I suspect we have all quite often experienced how the resistance to building new housing in our communities is driven by a perception that over the years new housing has not been accompanied by the necessary infrastructure, so people have found it harder to get an appointment with their GP or to get their children into the local school, and found that their local trains are overcrowded or their roads are more congested. It is vital for the Government to tackle this problem, and make sure that we get infrastructure in place that will not only fuel economic growth, but help to deliver the housing that we so desperately need.
Kevin Foster
I appreciate the explanation that the Minister is giving. When people first hear about the idea of infrastructure, they instantly think of roads and railways. Will my hon. Friend confirm that it will be slightly wider than that, including, for example, a good provision of superfast broadband services?
Gavin Barwell
Absolutely. We want the definition of infrastructure to include looking widely at all the different things that can help to drive economic growth. In the industrial strategy Green Paper published today, getting the right digital infrastructure in place is a key part of trying to ensure that we get the broad-based economic growth that the country needs. Again, we should aim for the best connections not just in core urban areas, but right across the country, so that all communities can benefit from that technology.
James Heappey
I am grateful. Clearly, the challenge in making sure that business rates are being retained and that they are sufficient to fund all local services is to grow the tax base locally. Does the Minister agree that focusing on growth deals that aggressively target those areas where the business rate base is smallest might be a good thing to do over the next two years?
Gavin Barwell
I know that the Secretary of State is really keen to work with communities right across the country to get these growth deals in place. We absolutely recognise that if we want to drive economic growth, the role of local communities—local councils, local businesses and local enterprise partnerships—is critical. The Government giving additional freedoms to help make that work possible can play a huge role.
One other measure that has not been touched on is the provision to change the inflation indicator for business rates from RPI to CPI. As the Association of Convenience Stores says in its submission, this will lower annual rate increases for businesses, providing a reduction in the burden of business rates that businesses are going to experience.
In conclusion, local government is a crucial part of our democracy. Many Members, including myself, but going right up to the Prime Minister, have served as councillors before coming to this House to serve as Members of Parliament. All of us know just how important the work of councillors is to the local communities that we have the privilege to represent. For too long, councils have been forced to rely on us here in Westminster and have lacked the levers and incentives required to drive growth and investment in communities, and those communities have suffered as a result. This Bill presents a historic opportunity to change that forever. A global Britain can only be built on a strong local foundation. This Bill will help to provide that, and I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Local Government Finance Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7),
That the following provisions shall apply to the Local Government Finance Bill:
Committal
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 21 February 2017.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on consideration and proceedings in Legislative Grand Committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and up to and including Third Reading.
Other proceedings
7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Chris Heaton-Harris.)
Question agreed to.
Local Government Finance Bill (Money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Local Government Finance Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of any expenditure incurred by the Secretary of State in consequence of the Act; and
(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Chris Heaton-Harris.)
Question agreed to.
Local Government FInance Bill (Ways and Means)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Local Government Finance Bill, it is expedient to authorise—
(1) the payment of sums to the Secretary of State in respect of non-domestic rating, and
(2) the payment of those sums into the Consolidated Fund.—(Chris Heaton-Harris.)
Question agreed to.
Deferred Divisions
Motion made, and Question put forthwith (Standing Order No. 41A(3)),
That, at this day’s sitting, Standing Order No. 41A (Deferred divisions) shall not apply to the Motion in the name of Secretary Sajid Javid relating to the Local Government Finance Bill Carry-over. (Chris Heaton-Harris.)
Question agreed to.