Marcus Jones
Main Page: Marcus Jones (Conservative - Nuneaton)Local Government Finance Bill (Fourth sitting)
Marcus Jones Excerpts(7 years, 2 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Jim McMahon
That problem relates to my earlier comment about the need for a transition period when aligning staff terms and conditions and salaries. The truth is that staff employed by local authorities and private social care providers are on significantly worse terms and conditions than those of their NHS counterparts who have similar responsibilities to them in hospitals.
The Government do not have an answer as to the number of care providers that could go bust. Councils will have a limited amount of money that they can pay, and some providers will decide whether they can remain in the industry. We do not have a solution if a significant number of those providers give up and pass the responsibility on to social care in the local authority. We cannot afford what we are doing today, and if they took such action we certainly could not afford the increase.
There is almost a double whammy: we want the local authority provision to be a decent place to live and a decent employer—because that is the state, and we want it to set the bar for a decent place. Not only are we telling private providers to pay the national minimum wage; we are telling them to pay between visits. It is not good enough that people get paid only for a 15 or 20-minute slot, and not while they are travelling to the next appointment. We have been pushing—good local authorities have been policing it—for their staff to be paid for their hours working on the job, including travel time. However, for some providers that has increased the staffing bill significantly, on top of national insurance contributions and the national living wage.
I have talked enough about social care. If I am honest, the Minister probably still has not been brought to the point of changing his mind about whether there is a crisis. However, I am satisfied as to my own experience in local government, as a member of the community with family receiving council services, and of listening to what is being said by professional social workers, the LGA, NHS England and, to be fair, Conservative council leaders. It strikes me that everyone accepts that there is a crisis—except the Minister, when he gave evidence to the Committee. I invite him today to put the record straight, face his responsibilities, accept that there is a crisis and commit today to doing something about it.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship, Mr Gapes. I thank the hon. Member for Harrow West for tabling the three amendments about the current central share of business rates income, and welcome the opportunity to discuss the important matters they raise.
To begin with amendment 1, removing the central share is essential to enable local government to retain 100% of locally raised business rates and to move away from its dependence on central Government and towards a more self-sufficient future. On Second Reading, the hon. Gentleman was supportive of the principle of 100% business rates retention, but his amendment would let central Government take a share of locally raised business rates income.
We have been working closely with local government, including doing significant work with the sector on developing the policy and on how 100% of business rates can be retained in local government. Keeping the central share would cut across the joint endeavour that the Government and the local government sector have embarked on.
The hon. Gentleman raised the principles of the fair funding review, the consultation response and further consultation. We have made it clear that it is a fundamental review of the approach to setting a baseline for 100% business rate retention. It is guided by the principles of fairness, simplicity and transparency, and we have been working in collaboration with local government in that respect. As the hon. Gentleman knows, we shall consult shortly.
Mr Thomas
The principles that the Minister outlines are all wonderful—who could possibly be against them?—but there is a touch of motherhood and apple pie about them. Will the index of multiple deprivation feature highly in the categories that the Minister has in mind for influencing how the fair funding review will play out?
Mr Jones
Last summer, we put out an open call for evidence from local government in order to get its views on that very type of issue. We have received its responses and we will provide them in due course. We have spent a significant amount of time today scrutinising this proposed framework legislation, and the hon. Gentleman will know that the detail of how the fair funding review will work, including with regard to redistribution and setting the baseline, will be dealt with at a later stage, when we have the time and information and have worked with the local government sector to put together a fair package. Many local authorities have responded to various departmental consultations in recent years by making it clear that they do not believe that the needs assessment, which was last looked at properly well over 10 years ago, truly reflects their demographics, because they have changed significantly since it was last done.
Mr Thomas
I entirely accept the Minister’s point about the needs assessment—it is entirely reasonable, in my view, that a new one be conducted—but there is a touch of mañana about his argument. He said, “The fair funding review will come in the fullness of time. Don’t worry about that. It will come in due course.” He could have submitted the Bill for prelegislative scrutiny; instead he is rushing ahead with it before any of the 450 responses have been published. Why is he so desperate to get the Bill through Parliament before we have had the chance to see the outcome of the fair funding review and a draft of the regulations?
Mr Jones
As the hon. Gentleman knows, this time last year the Government put out a four-year offer regarding the local government settlement to councils, 97% of which accepted it. At the same time, we made it clear that we would honour those commitments. We also made it very clear that we would be moving to a system of 100% business rate retention and that we would look at the fair funding situation. We made the timing of the move to the new system clear, and we have to have framework legislation in place to make that timing happen. Given that the fair funding review will be a significant piece of work and that we are going to look very carefully at need, we also need time to follow that piece of work through. So we need the legislation, and then we need to put the pieces of the jigsaw together to come up with a complete picture. I am sure the hon. Gentleman understands that.
David Mackintosh (Northampton South) (Con)
Does the Minister recall coming to the Communities and Local Government Committee to give detailed information as part of its inquiry into the retention of business rates?
Mr Jones
Yes, I must admit that I have spent a number of pleasurable afternoons responding to a number of inquiries undertaken by the Communities and Local Government Committee—we have two esteemed members of that Select Committee here. We have been talking about it for some time and we have engaged not only with the sector but with colleagues in this House and particularly with the Select Committee. It is not as if we have just dreamt this up and not engaged with people.
Mr Thomas
I am grateful to the Minister for giving way. He often hides behind the four-year offers to local authorities when a difficult question is asked about the funding of local councils, but already the basis on which councils signed up to that four-year assessment has changed, because of the changes to the new homes bonus and the money being taken out for adult social care. I gently suggest to him that when it comes to completing jigsaws, it is helpful to have all the pieces to do so. At the moment, this Committee does not have all the pieces; we just have one third of them.
Mr Jones
The Government are committed to and have shown good faith in keeping to the agreement we made about the four-year settlement. Regarding the new homes bonus, which was not included in that settlement, we made it very clear at the time that there would be changes to it. In fact, this time last year we embarked on a consultation explaining that we wanted to sharpen the incentive in relation to the new homes bonus.
In addition, it was quite clear to local government at the spending review in 2015 that the new homes bonus would change, because the improved better care fund, which will total £1.5 billion by 2019-20, was intended to be funded by savings made from it. As such, changes to the new homes bonus have not necessarily been a shock to the sector.
Jim McMahon
I appreciate the Minister giving way, given the time that we have.
The Minister’s response would lead us to believe that the majority of councils are signed up to a four-year efficiency programme of budgets that can be balanced within the settlement that they have been offered, but I know from my own local authority that its four-year efficiency plan had a budget gap of £99 million between the cost of providing services to meet its statutory obligations and the income from grants, council tax and business rates. The Government have not come forward and said where the £99 million will come from; in fact, the changes being made through this Bill will potentially make that situation worse. Can we have a clear idea of how many of the efficiency plans submitted to the Government showed a gap of that nature?
Mr Jones
We did indeed ask for efficiency plans to be put forward and we did so on the basis of making the offer of the four-year settlement, and only 10 local authorities across the country did not accept that offer.
If the hon. Gentleman wants me to elaborate, I would not say to him that things are easy for local authorities—far from it. Local authorities have done an extremely good job in many ways over the last six years or so in doing their part in deficit reduction, which was so necessary after the shambles of a deficit that was left behind by the Labour party. I say they have done a good job because overall satisfaction with services has been maintained, and local authorities have again taken up the baton, particularly in relation to this four-year deal, and they have run with it.
Jim McMahon
I thank the Minister for that point. Let us be clear and honest with each other on this issue. The choice that local authorities had was not the choice of financial stability and security. The gap in provision is still the gap in provision. The choice put forward by the Government is basically a certain cut or an uncertain cut.
Mr Jones
The point was that local government knew there was a challenge to be met and they knew they were not immune to the reductions in public spending. Coming back to the point, what local government had asked for for many years, above a lot of other things, was certainty. With the four-year deal we have given a significant level of certainty to local authorities that hitherto had always been hanging on the word of Government come December as to what their position would be when they set their budget for the following financial year, which would start at the end of March and take them through to early April. Generally, local government have welcomed that. As to whether they would want a quantum of money within the settlement, I am sure many local authorities would, but at least the deal has allowed local authorities to plan and to use other resources. For example, in many cases it has allowed them to use reserves to bring forward transformation plans that enable them to meet the challenges that they face.
Let me respond to the point that was made about two-tier authority areas by the hon. Member for Harrow West and the way in which the splits would be made in terms of income between the different tiers of local government. The amendment to retain the central share does not achieve that aim. How business rating can be shared between the tiers will be set out in regulations under part 4 of schedule 7B to the Local Government Finance Act 1988. We do not need to retain a central share to distribute business rates income between tiers of Government. As has been the running theme through this and I think will be a running theme in Committee, we are working with local government to work out how the split should work under 100% business rate retention.
Mr Thomas
To pursue another running theme, is there any sense of timing for when those draft regulations might become publicly available so that local authorities, not just those on technical working groups between the Department and the LGA but local authorities in all their full glory, can see and understand what those regulations might mean for their finances?
Mr Jones
As I have said, there is still a significant amount of work ongoing with the sector that we need to bring forward to amend those regulations. That work will continue. When we get to the point where we are able to put more meat on the bone, we will certainly do so and that information will certainly be available to the House.
On amendments 2 and 23, the explanatory statement provided by the hon. Gentleman on amendment 2 demonstrates that he is seeking to ensure that a proportion of business rates income is retained specifically for the purposes of spending on social care services. Similarly, amendment 23 seeks to impose conditions on how locally raised business rates should be spent by a council and by central Government if we were to retain the central share. I will explain why the amendments are not necessary.
As the hon. Gentleman is aware, decisions are yet to be taken about the services to be devolved to local government to make 100% of business rates retention fiscally neutral. That does not require primary legislation and is therefore not a part of the Bill. Funding for all services that councils deliver, including social care services, will be part of the considerations. The fair funding review, which I mentioned earlier, will also consider the relative needs of local authorities, including adult social care, and will set initial funding allocations for the 100% rates retention system.
As I said earlier, we recognise the pressure on councils. Despite the comments from Labour Members, we also recognise the challenges of and the pressures on social care services, but we have taken action to help with such pressures. Local government will receive up to £7.6 billion over the course of this Parliament to spend on adult social care services. I assure the hon. Member for Harrow West that the introduction of the 100% business rates retention system does not mean that local government may no longer receive any funding from a central Government grant. Where there is need to provide a funding stream for a specific service or outcome, the Government can continue to make such provision.
I hope that I have reassured Members in a reasonably pithy way that the amendments are not necessary and that we can achieve their aims without taking a central share of business rates income. I therefore ask the hon. Gentleman to withdraw the amendment.
Mr Thomas
We have had an interesting debate. The challenge set before the Minister in amendments 1 and 23 was to clarify the Government’s intent towards the redistribution concerns of local authorities. We have not yet had clear answers to my specific questions on redistribution.
I asked how redistribution would work in practice. We have not had an answer to that question. I asked whether there would be amendments to the system for tariffs and top-ups. I do not think that the Minister mentioned them at all in his response. I asked how, given the importance of revenue support and other grants to ensure that areas’ spending power is equalised, the new system would make such compensation. We have had only a partial answer to that—I will come back to it in the clause stand part debate. I asked for more clarity on the key principles on which the fairer funding formula will operate. It is true that I got that offer of some principles, but no clarity beyond those very basic, broadbrush principles; nor was there any clarity—or even, I am sad to say, any recognition—about the concerns facing the poorest areas in income and spending power, as opposed to wealthier areas such as Westminster, under the new system.
I am concerned that we are no further forward. It was interesting to hear the Minister talk about the need to get the Bill through in order to move ahead with the other elements of the package, but as I indicated in an intervention there was nothing to stop the Minister from submitting the proposals to prelegislative scrutiny. The obvious place to do that would have been in the Communities and Local Government Committee, as has happened in the past for similar pieces of legislation.
The only thing that would appear to be absolutely fundamental for Ministers in the Bill is the abolition of the local government finance settlement and the scope for a debate in the House of Commons on the state of local government finances. The only thing that Ministers will benefit from immediately seems to be the absence of that particular form of financing.
Mr Thomas
The hon. Gentleman was unfortunately not here at 11.30 am when I made clear our support for the principle of 100% business rates retention. Clearly, we want the system to work. However, I suggest to him that the purpose of this Committee is surely to probe what evidence there is for the case that the Government are making. He is slightly more considered than the usual Conservative MP one gets to sit opposite on these Committees, so I ask him where the evidence is, for instance in an impact assessment, to suggest that there will be a significant increase in economic growth as a result of the Bill? If the 50% business rates devolution did not offer that evidence, as one would have expected it might, where is the evidence that 100% business rates devolution will produce that?
Let me make it clear: I do support the principle of 100% business rates devolution, but the job of the Opposition is to expose where there is a lack of evidence, to challenge Ministers to provide that evidence and to ask for the detail of how the system is going to work. In the absence of that, one is entitled to have a little scepticism.
Mr Jones
The hon. Gentleman asks what additional incentive is provided for a local authority in a move from the 50% regime to the 100% regime. I am sure he will know from the Bill that we are scrapping the levy, which is effectively a tax on growth. That will give local authorities far more of an incentive to do the right thing, support businesses and widen their business rate base.
Mr Thomas
It is interesting that the Minister chooses to talk about the levy and not the lack of evidence for economic growth having been generated by the 50% business rates devolution. One would have thought that there would have been some evidence to justify the assertions that were made in 2013-14 by his predecessor that a whole new wave of economic growth would be generated as a result of the measures. In the clause 1 stand part debate, I hope to suggest that factors other than local councils’ attitude to development might be holding back economic growth.
Sadly, we did not hear anything from either the Minister or the hon. Member for North Swindon that offered confidence to a council such as Allerdale Borough Council that its difficulties with the barriers to economic growth will be dealt with. The hon. Gentleman made a valiant try by suggesting that pooling might work. I do not know whether he knows Keswick in the Lake District, which is the central town in Allerdale.
Mr Thomas
I gently suggest to Government Members that Heathrow brings the issue into fairly graphic light. In the evidence that Professor Tony Travers gave on Tuesday, he acknowledged that, where there is a major infrastructure development, that, rather than any actions of the local council, is likely to be the key driver of economic growth and business rates in an area. One can imagine the same issue with High Speed 2, which, wherever a main station or terminus is located, will be the key driver of economic growth in an area, notwithstanding other measures that the local authority might take. That surely justifies even more the case for redistribution of the revenue generated by business rates.
Mr Thomas
The hon. Gentleman makes an interesting point. He would also acknowledge that if one has significant numbers of new people living in an area, one has to increase the services there. He presents an optimistic scenario, but although the business rates income might be matched, there might be additional costs arising from the provision of new or extra services.
Mr Jones
The hon. Gentleman has made the point about converting offices, for example, for residential use several times. In the spirit of localism, which is what the Bill is all about, let me ask this question: is it not right that if a local authority does not want to take that approach, it could issue an article 4 direction, which would protect that office block as offices?
Mr Thomas
The Minister is right: the local authority could do that, but let us assume that, for whatever reason, it does not. Not every local authority will want to stop every landlord from converting land to offer housing. I think about my council and the housing crisis in London. There is a very difficult conundrum and balancing act for local authorities. Do they try to take action to deal with the housing crisis, because of the 100% business rate devolution? Do they look to encourage business rates growth? If Ministers cannot sort out the housing crisis, local authorities in this situation will be caught between a rock and a hard place, and they will have to make very difficult choices.
Rob Marris
No, I will not, because I want to move on and talk about the abolition of the revenue support grant—I am not primarily talking about incentives—which is set out in clause 1(3). I appreciate that the abolition of the revenue support grant would not abolish the discretionary grant-paying power under section 31 of the Local Government Act 2003, but it would replace a mandatory with a discretionary funding approach. The explanatory notes, produced at the behest of the Government, are very helpful in that regard. They lay bare the Government’s intention, which is, in effect, to abandon just-about-managing authorities and to help those that are doing well—a kind of survival-of-the-fittest approach. I say that because paragraph 31 states:
“The removal of revenue support grant, together with provisions ensuring that local government will keep 100% of locally collected business rates, will increase the self-sufficiency of local government by making them less reliant on grant and more reliant on locally raised taxes.”
I understand the concept of self-sufficiency—it can be laudable—but we have to take into account where our country is at, not where we would like it to be at. That is the very point that my hon. Friend the Member for Oldham West and Royton made about us being one country.
We have heard about the incentives to balance this proposal and about what councils are going to do with their self-sufficiency, but in places such as Wolverhampton, which is one of the most densely populated cities in Europe—presumably because it is such a wonderful place and lots of people want to live there—there is not a lot of spare land. I understand—the hon. Member for North Swindon can correct me if I am wrong—that land is not such a pressing issue in Swindon or, indeed, in Wiltshire.
Hon. Members adverted to what councils might do with the self-sufficiency that the abolition of the revenue support grant in clause 1(3) is ushering in. They might have cheaper car parking. I understand that, for business rates purposes, they might think that will get more people coming in and shopping, and therefore the rental value of shops will go up, but it can be dog eat dog in terms of air quality, which is a huge problem not just in London but around our country, including in Wolverhampton.
Out-of-town shopping centres were adverted to. There are huge problems with the environment in that regard. There are problems in places such as Wolverhampton, a densely populated unitary authority. Any out-of-town shopping centre is likely to be next door, in the Chief Whip’s constituency. That is great for the people of South Staffordshire, but not so good for the people of Wolverhampton. We are going to get a dog-eat-dog approach, because South Staffordshire District Council is going to encourage that. We have heard about warehousing. I appreciate that, during the economic crisis, it was in Swindon’s interest to provide a giant car park for Honda, but that does not help the future economic development of our country.
This is not the way forward for our country. Getting rid of the revenue support grant, and having a system that is much more dog eat dog and “every municipality for itself” is not a good way to go if we want our country —England—to be a society where we have mutual obligations to each other.
Mr Jones
The hon. Gentleman is gilding the lily slightly. The Government have been quite clear that 100% business rate retention means that 100% of the business rate will be retained by local government, not one individual council. Within that system, there will be a system of redistribution to reflect a number of things, including need. Does he not acknowledge that?
Rob Marris
I agree—there is a risk of a beggar-my-neighbour downwards. The Government really ought to think again, in the absence of evidence that this will produce the change we all want in terms of business growth and growth of the tax base.
Mr Jones
To clarify the point that the hon. Gentleman just agreed with, made by the hon. Member for Harrow West, if a particular area decides it wants across its area to reduce the business rate multiplier, that local authority would have to pay for that within the quantum of its own business rates, and it would not be subsidised by another authority’s.
Mr Jones
The hon. Gentleman mentioned the iron fist of Government as it once was. Back in 2010, 80% of the money that went to local government was distributed from central Government, with the Government deciding exactly where that money went. Did that give much of an incentive for areas to grow their business rate base?
Jim McMahon
I thank the Minister for gently leading me into the scandal that was 2010, when the coalition Government rocked into office, holding hands in the rose garden and making promises of a brighter future. Oldham did not have that experience. Some £24 million was taken from its area-based grant; money put in place for urban renewal following the 2001 riots was snatched overnight at the cost of the town’s regeneration. In the same year, the housing market renewal programme, which was meant to reform the council tax and business rate bases in the area, was snatched. It left terraced streets, with boarded-up properties that had been bought for demolition, to stagnate. The Government have never come back to the table with an answer on what to do for urban renewal in towns like Oldham. Some in the room may look back on 2010 with fondness; I look back and think it was the year the Government turned their back on towns like Oldham.
Jim McMahon
Thank you for connecting us back to the Bill, Mr Gapes. My point connects exactly back to it, because the Minister’s challenge was whether we would prefer a centralised approach, or whether we want local areas to be given the freedom to crack on; that was what I took to be the essence of his contribution. He perhaps clouded that slightly with a reference to those horrible years in 2010, but nevertheless the spirit of it was related to the Bill. My response is this: there will always be a need for elements of redistribution, because we are not starting from a clean slate. We recognise that some areas will require more to bring them forward to the point at which they become self-sustaining and self-financing in the way that Government envisage. For a town such as Oldham, reframing the business rate base and the council tax base was critical. The funding streams from central Government that I referred to were absolutely relevant to that town’s success.
Let us leave the past in the past, and look towards the future and what the Bill provides as a way forward. There is no doubt that we need to move to a less centralising state, and that local authorities have been crying out for more freedoms, power and independence from central Government. This measure does potentially provide some of that freedom. However, power is nothing without the resources to get things done. We need to make sure that we are not effectively repeating inequalities of the past, or even deferring blame and responsibility for cuts and reductions down further to local government, when it has had it up to its eyes because of what it has had to deal with through austerity.
The framework of redistribution is about how we will collect money from local authorities that have a very strong base and where growth has taken place at an accelerated rate, sometimes through no action of the local authority. How do we capture that growth to make sure that it can be used to benefit the whole UK? That detail has not actually been brought forward. From the Bill we know what has been taken away, but we have no idea what is being put in its place. We know, because we have been told today, that central Government want to let go and allow local government to administer its own scheme, but we do not know what that scheme is, because the programme has not been brought forward; it would provide for a more meaningful debate if it had been. If the Minister were to intervene and give a bit more detail on that, it would be extremely helpful to the debate.
Mr Jones
The hon. Gentleman refers to the question asked about the multiplier, which I answered. The information that he says I divulged today and brought to the world after keeping it to myself for so long was actually in our summer consultation in July last year, so there is nothing hidden in that sense.
Jim McMahon
I thank the Minister for remembering that and sharing it with the Committee today. It has been very useful for the debate. This is an open offer from this side of the House: if we get this right, it will benefit every local authority, provided that the framework is robust, proper checks and balances are in place, and there is a genuine mechanism for redistribution to ensure that a basic level of service provision can be provided in every area of this country—not as a result of their historical council tax base or business rate base, but because we believe in decent public services reflecting the need in local areas. That is exactly the call that is being made.
That will be a complicated formula, which will take into account the rural and sparsity issues; urban needs and deprivation; and the physical costs and limitations of delivering public services. We know that, but we need to see the detail and work through what it means in practice. When we have that detail, we could have a really serious debate about the future funding of local government. This will be a continuous call; this is not just one debate about public services and local government funding. Local government is asking not just for the retention of business rates, and to be left with council tax to sink or swim, but for fiscal devolution. That will mean a broader suite of taxes and duties, raised and retained locally, to help grow local economies, get people into better-paid work and provide decent housing. That is what local government is asking for. If the framework is the start of that, we should welcome it, but there is a lot of detail to be provided.
Jim McMahon
No, I will conclude. I know that Mr Gapes is being very patient, but I can see a yearning in his eyes to go on Twitter and put the world to rights—and so have I, because it has been a busy few days.
We do not live in a world in which there is going to be a comprehensive review of local government finance—that is not what the Bill is about, and we need to be honest about it. But the Bill will have consequences that we need to take on board, and we can do that only if we have information that we can assess in a detailed way. As soon as that information is provided, we can bring more value to the system and, I hope, ensure that even with very limited resources, it is the best and fairest system that it can be.
Mr Jones
The Government support clause 1, which will enable the introduction of 100% business rates retention for local government. It covers a number of different decisions, including the changes in schedule 1, which I will come to later.
We discussed the scrapping of the central share extensively when we debated the Opposition amendments—
Mr Jones
I am not going to reopen that debate. I say that as a direct answer to the hon. Gentleman, who is quite good at looking backwards and never forwards in life—but I will not hold that against him. Instead, I will speak about the payment of revenue support grant, about which there has been much discussion during this debate.
Clause 1(3) will remove chapter 2 from part 5 of the Local Government Finance Act 1988, which provides for the payment of the revenue support grant in England. As part of 100% business rates retention, we will devolve existing grants and new responsibilities to councils. As the Committee has discussed on a number of occasions, that will give councils control of approximately an additional £12.5 billion of business rates to spend on local services. The revenue support grant, which will be worth £2.3 billion in 2019-20, is part of that.
Let me be clear that the Government will retain a number of powers. Much has been said about how the Government might be able to deal with payments to local authorities. To reassure Opposition Members, under section 31 and section 36A of the Local Government Act 2003 and section 88B of the Local Government Finance Act 1988, payments can be made by Government to local authorities. I will give a couple of examples.
Mr Jones
Before I give way to the hon. Gentleman, I will mention another example: the Homelessness Reduction Bill, brought forward by my hon. Friend the Member for Harrow East (Bob Blackman). He has done a magnificent job with a Bill that the Government fully support and that will reduce the number of homeless people in our country. To support that Bill, the Government will make available additional funding—£61 million in this case—to local authorities through a section 31 grant. The assertion that if an authority does not have revenue support grant, funding cannot be given from central Government to local government, is false.
Mr Thomas
I intervene briefly to make the point that perhaps the difference between the provision of revenue support grant and of the grant for flooding to which the Minister alluded is that the grant for flooding was given after the event, whereas the provision of revenue support grant allows authorities to think ahead—“There may be issues around flooding here, so we will allow flood defences to be built earlier by providing a bit of money though the revenue support grant now.”
Mr Jones
I would not disagree with the principle of the hon. Gentleman’s argument, but there are mechanisms other than revenue support grant through which payments will be made within the system. In particular, while 100% of the money raised through business rates will be retained by local government, quite clearly a core principle of that will be redistribution.
The removal of revenue support grant is part of wider changes we are making to provide increased funding for certain councils, which we know councils welcome. We are helping to move local government away from dependency on Whitehall through clause 1(4), which introduces schedule 1 to the Bill, containing a framework in law for multi-year settlements.
Rob Marris
The Minister may recall, if he casts his mind back, that I specifically referred to section 31 of the Local Government Act 2003 and counterposed it with the revenue support grant on this basis: section 31 funding is discretionary; the revenue support grant, in essence, is not. Therefore if one replaces or seeks more to rely on something discretionary, rather than mandatory, that takes power away from local government and puts it in the hands of the person who has discretion—in this case, central Government.
Mr Jones
As we have covered quite extensively, there is redistribution within the system. There will be resets of the system, and a baseline will be set, so there is the mechanism to provide that. The overriding point, as acknowledged by local government, is that it is good that the revenue support grant mechanism is not in the Bill.
Mr Thomas
One small reason to celebrate at the end of this clause stand part debate will be the revelation that something the Minister proposed in the consultation document is confirmed and will be a reality. As he is on a roll in that respect, will he tell us how long the gap between reset periods will be? Has his Department made a decision on that?
Mr Jones
As I have said to the hon. Gentleman on a number of occasions, a number of regulations and other pieces of work under the Bill will be needed to determine the detail of the scheme. We will be working carefully with local government to determine matters such as that to which he refers.
I do not intend to delay the Committee for much longer. Together the changes reflect the fact that under 100% business rates retention there will no longer be an annual finance settlement to distribute central Government grant to support local services. Local authorities will be more financially self-sufficient, funding local services from local resources. I therefore recommend to the Committee that the clause stand part of the Bill.
Mr Thomas
I will respond briefly to the Minister. The Labour party will not object to the clause standing part of the Bill, but with this caveat: the abolition of so much grant funding from central Government to local authorities is an issue of considerable concern to local government, notwithstanding its general support for the principle of 100% business rates devolution. We will reflect on what the Minister has said, we will celebrate the little bit of clarity that we got in the debate, but we will not object to clause 1 standing part of the Bill.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Jackie Doyle-Price.)