Provisional Local Government Finance Settlement

Lord Young of Cookham Excerpts

Wednesday 6th January 2021 Lords Chamber

[Lord Greenhalgh (Con)]

My Lords, I have never heard so many questions poured in with such economy, but I refuse to give advice to any council, or any councillor, on how they should tax their local communities. I could point to my own record as the leader of Hammersmith and Fulham Council. For six years we cut council tax by 3%, and for one year we froze it. That was because I believed that our council tax level was too high. I did not understand why neighbouring boroughs such as Wandsworth and the Royal Borough of Kensington and Chelsea had substantially lower council tax than Hammersmith and Fulham. I chose the route of being able to tax less and provide better services, through more efficiency and driving greater productivity. So I would say that it is down to local leaders to decide how they set their council tax. My advice would be: what do you think is in the interests of your people? I agree that council tax is a regressive tax—but it is particularly ridiculous to see how some councils have to raise their funds largely through council tax increases, because they receive so little grant as a proportion of their combined budget. I shall give more examples of that later.

[Lord Young of Cookham (Con)]

My Lords, in the Statement we are discussing, the Secretary of State said:

“I want local government to emerge stronger, more sustainable and better able to meet the needs of those it serves.”


Does my noble friend, with his local government experience, recognise that the current tax base for local government is unsustainable, with domestic rates 30 years out of date—and, as he has just admitted, regressive—and commercial rates killing the high street? Will the White Paper on devolution and local recovery, promised for last autumn, set out a firmer and broader basis for local government, so that it can be empowered as the Secretary of State wishes?

[Lord Greenhalgh (Con)]

My Lords, I have saved my data, which I carefully put together—although I will not be able to read it very well—for my noble friend’s question, of which he kindly gave me notice. I shall tell a tale of two boroughs—the London Borough of Richmond upon Thames, a Liberal Democrat authority, and the London Borough of Hammersmith and Fulham, now, sadly, a Labour borough. It was taken over after I was leader of the council—but that is democracy for you. Things can change back again, I hasten to add, for the benefit of the noble Lord, Lord Kennedy. Things can swing both ways. For those two boroughs, exactly the same budget base was estimated, through both council tax and grant. Richmond upon Thames had £173 million and Hammersmith and Fulham £174 million—pretty much the same amount. Yet 83% of the money in Richmond upon Thames is raised through council tax, whereas only 31% of the money in Hammersmith and Fulham is raised through council tax. That is patently absurd. Of course we need to think about a more sensible system of local government finance. It is very hard to estimate via complex formulae, and I am sure the devolution White Paper will look into some of the vagaries of local government financing, whereby a river can separate, and thus create such great differences between, two neighbouring authorities.