Local Government Finance

Mark Pawsey Excerpts

Tuesday 5th February 2019 Commons Chamber

[Mark Pawsey (Rugby) (Con)]

It is a pleasure to follow the hon. Member for Liverpool, Riverside (Dame Louise Ellman), for whom I have the greatest respect.

I welcome the Secretary of State’s announcement that councils’ core spending power will increase by 2.8%, and that following a real-terms increase they will have £46.6 billion to spend on services for local residents. I know that councillors, officers and staff will greatly appreciate what he said about their working together to provide value for money for residents in recent years.

I also welcome the key principles that lie behind the Government’s approach. They include the principle of encouraging growth by providing housing and the business premises that will create jobs, and hence providing funds in response to the needs of local residents. I hope to demonstrate to the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), who will visit Rugby later this week, that our council is doing a brilliant job. The council represented by my hon. Friend and neighbour the Member for Nuneaton (Mr Jones) has been less effective.

In July last year, the all-party parliamentary group for district councils, which I chair, produced a report on district council finances. District councils provide 86 of the 137 essential local services in two-tier areas, and cover 40% of our population and 60% of the country by area. According to evidence that the APPG received from the representatives of 60 district councils who appeared before us during our Select Committee-type inquiry, there was real concern about the possibility that the majority would stop receiving revenue support grant by this year. We are delighted that the Secretary of State and the Minister have recognised the concerns about “negative grant”. It was feared that councils would give back to the Treasury more than they would receive from the Ministry for Housing, Communities and Local Government. District councils throughout the country are greatly reassured to learn that that will not now happen, and we are grateful to the Secretary of State.

Our report also asked for no further changes in the new homes bonus baseline rate. The new homes bonus has been a great success during our party’s time in government. It has encouraged local authorities to provide new housing, to fund infrastructure, and to compensate communities for the disruption that occurs when development is taking place. I am very pleased that the Secretary of State has acknowledged that and retained the current baseline, although there is a strong case for the removal of that 0.4% level. It is important to recognise that district councils’ housing completions have increased by 45% since the introduction of the new homes bonus.

There are a couple of other asks in our report. One, which has already been discussed today, is recognition of the role of councils in prevention. District councils, through their housing and planning authorities, provide services that are critical to the health of communities, such as leisure and recreation facilities and home adaptations, and they also tackle homelessness. I am delighted that my local authority, Rugby Borough Council, has allocated an increased budget for that work, and is working closely with the charity Hope 4 to deal with an issue that was also mentioned by my hon. Friend the Member for Nuneaton.

The local authority representatives from whom I have heard want more freedoms and incentives when it comes to raising revenue, but I should enter a word of caution in that regard. I have heard of too many local authorities that are turning themselves into property investors and property companies, often outbidding commercial organisations in the private sector, and I am worried about the level of expertise. Although it is entirely right that local authorities want to invest in their communities, I am worried that sometimes they are not sufficiently hard-headed.

The business rates retention reform is perfectly sensible. I ran a small business in Rugby between 1982 and 2008. I had always believed that what I paid in business rates went into my local community, but for much of that time, it did not. When I learned that, my question was, “What incentive is there for a local authority to do the right thing for growth and attract businesses?” We have turned that around and, like my hon. Friend Nuneaton, I am therefore disappointed that Warwickshire was not selected as one of the pilots.

We are considering a strong settlement today—it is a step in the right direction. Of course, there is always much more we can do, and I look forward to the Local Government Minister responding to the various points that have been raised in the debate.

[Several hon. Members rose—]