Business Rates (North-East)

Debate between Pat Glass and David Ward

Tuesday 25th October 2011 Westminster Hall

[Mr David Ward (Bradford East) (LD)]

I thank the hon. Member for Sunderland Central (Julie Elliott) for introducing the debate. I feel that I am gatecrashing a tad, but I will not take too long. However, we have many things in common, which I hope to bring out.

I have spoken at length with Councillor Janet Battye, who is vice-chair of Local Government Yorkshire and Humber, and there are real concerns about the proposals. The deadline for submissions is 27 October, so there is still time, and the important point about having the debate now is that it might encourage people to make submissions before the deadline.

There are two overall concerns, which I will detail. First, in terms of those with buoyant business rate bases, the concern is that this will be a case of “to those who have, more will be given”, with the proposals simply sucking in additional investment. As areas get more proceeds from business growth, they will invest them, which will result in more proceeds, which will result in more growth, and so on. There is also a concern about the historic and fundamentally important link between funding levels and the overall assessment of local needs. If that link breaks down, it will be to the detriment of many authorities that serve deprived communities.

As to the details, I am a member of the Chartered Institute of Public Finance and Accountancy, and I realised many years ago that the way to kill off a conversation at a party is to start talking about local government finance. None the less, the issue is crucial to millions of people.

There is a danger that the proposals are being rushed a bit, especially at a time when local authorities—especially many in the north—face huge reductions in their tax base and income, particularly as a result of front-loading. It is also difficult to look at the long-term repercussions of the proposals when local authorities face problems with the amount of Government grant they will receive for council tax.

The second point—perhaps it should have been the first point, because it was raised before the Localism Bill was considered in depth—relates to having a fundamental review of the relationship between central and local government. Such a review should come first; then we should have the structure, followed by the financing of local government. However, we have not really had a serious debate about the sort of relationship we want between central and local government.

There is also the false belief that business rates are the same as economic growth, but that is not necessarily the case. It is certainly not the case that there is a link between business rates and needs in an area. We are in the process—I think we are all signed up to this—of rebalancing the economy in many ways. Hopefully, the economy is being rebalanced from the south to the north, but we are also looking at different sectors in industry, at the type of growth we are likely to encourage and at whether it is likely to be in accordance with our stated rebalancing policy. SMEs and manufacturing have been mentioned, and we lost 15,000 manufacturing jobs in Bradford between 1998 and 2008. We desperately need those jobs back, but will the proposals incentivise the creation of manufacturing jobs, or will we take the more easy route of retail growth?

There is also the issue of the redistribution of wealth that might take place. About £3 billion more in business rates will be generated by 2014.

[Pat Glass]

On that point, one advantage of being a little older is that we have been around before and seen things before. We should remember where the formula grant system came from. Margaret Thatcher introduced it because local authorities—largely Labour ones—in cities were increasing their business rates, and businesses called for the formula grant system. The Government need to think about that because, although we need the detail of the proposed system, they are in danger of being seen as anti-business over this issue.

[Mr Ward]

The details are crucial, and that is why there is a need to take things slowly and not rush. At times trust between central and local government is tested to the limit. We need an established, agreed and fair starting point. At the same time that there are dampening effects on local government finance and a less than accurate assessment of spending pressures on local authorities, we are talking about a base of 2012-13. Many authorities have taken a real smack in the front-loading of the local government settlement and, if the base were 2010-11, that would paint a totally different picture of an area’s needs. That issue has been raised by the Association of North East Councils. We also need regular review, because things change rapidly, certainly in the economy. We need to review the baseline, and five years is too long. I would argue for the resets to be on a shorter time scale.

The point that I was making was about the possible transfer or redistribution of wealth, because £3 billion in additional business rates will be generated by 2014, but that will be happening at the same time that local authority budgets will go down. There may be a transfer of wealth to those areas that initially prosper well from business rate growth, from authorities that have large reductions in their revenue grant.

Academies Bill [Lords]

Debate between Pat Glass and David Ward

Thursday 22nd July 2010 Commons Chamber

[Pat Glass]

Yes, it could, and yes, it should. However, as the hon. Member for Bradford East (Mr Ward) said yesterday, sometimes good people do bad things, and head teachers are not always as forward thinking as we would like them to be. Obviously, the best ones are, but if a school does not have any blind children, why would it buy in to a sensory service? It could also argue that, if a child wishes to attend that school, it cannot meet their needs.

[Mr Ward]

I must say this is a fantastic debate. I was not sure of the right time to introduce this point, but it is not always the case that, if a school has its own budget, it will do the best thing by the children. The best example is probably the provision of education social work. It might seem that the school is the client of the education social worker, but of course it is not—the child is the client. Very often, if a school is offered the money, it will buy in its own education social worker, who will be a door knocker for getting those kids into the school. Once a child is on the roll and the school is getting the funding, some schools will say, “Actually, we’re not too bothered if that person doesn’t turn up today.” Believe me, it is true! It happens—because, in many cases, schools are forced into doing it. But the child is the client, and if the best place for the child is in school, the education social worker will try to facilitate that to the best of their ability. However, if that education social worker is employed by the school, sometimes the school will let the child in, but sometimes it will not be too bothered. I have known young children who have been out of school for two years—

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Order. Interventions, by their very nature, should be short.