Local Government Finance (England)

Rebecca Harris Excerpts

Wednesday 10th February 2016 Commons Chamber

[Mr Clive Betts (Sheffield South East) (Lab)]

rose—

[Rebecca Harris (Castle Point) (Con)]

rose—

[Greg Clark]

I will give way in a second.

I agreed with those views, which is why I have ensured that the final settlement will include a transition fund worth £150 million a year to cover 2016-17 and 2017-18.

[Rebecca Harris]

My right hon. Friend spoke about Government attaching strings to their funding. It was a version of he who pays the piper calls the tune. Does he believe that we might be moving to a world that is much more democratically responsive not only to the local electorate, but to businesses? They have often felt neglected by their local council areas and they will now feel that they are rather more important and have a starring role.

[Greg Clark]

My hon. Friend is right. It was a ludicrous situation, whereby local councils levied business rates, collected them and sent them to the Treasury. Local businesses felt that they did not have the same direct connection as council tax payers with their local councils. The best run councils have always had a high regard for promoting business in their areas, and it is high time that they were rewarded and backed for that. The reforms do that.

--- Later in debate ---

[Rebecca Harris (Castle Point) (Con)]

The need to reduce the deficit has inevitably put pressure on councils right across the country. Even those that have made substantial and successful savings are understandably concerned about the transitional period during the move from centralised funding to an accountable system of self-funding.

At the start of this year, the leader of Essex County Council wrote to me and my fellow Essex MPs, setting out his concerns regarding the provisional local government finance settlement, which he thought would see the council lose over £50 million a year more than it was anticipating, despite having budgeted carefully. We took our case to the Secretary of State and I welcome the fact that he listened. As we know, he has made available up to £3.5 billion for social care.

Essex, like many council areas, has a serious and pressing challenge in its ageing population. It has the longest coastline in Britain and attractive coastal towns, so it is an attractive place to retire to. Over the next decade, our older population is expected to grow by 9%. As has been said, it should not be assumed that just because someone lives in beautiful rural Essex, they are not stretched for cash. People who live on a park homes site on a fixed income may not be the richest members of society. The demographic pressures are huge and we welcome enormously the fact that the Government have listened to our case.

Essex County Council is very much looking forward to the challenge of being more go-getting when it is dependent on the retention of business rates. We recently hired a new chief executive who is an ex-businessman, and he is taking an incredibly positive approach. We believe that the devolution agenda will transform local government from being about service delivery and dealing with needs to being organisations that set out to change their areas, encourage business development, and create jobs and growth. It is businesses that create jobs, wealth and growth, not politicians like us and local councillors.

Councils such as Essex County Council, which have shown that they can make efficiency savings, will benefit from the security of this four-year settlement. During this difficult time for all public finances, councils need to be able to plan for the medium term. Owing to the foresight of this four-year settlement, they can do so. This settlement brings greater transparency and parity in local government finances than we have ever had before.

The retention of the new homes bonus, which the Secretary of State mentioned, is incredibly valuable. Councils will have to be active in bringing forward new development and new houses, rather than sitting back passively, as they used to in the days of top-down national targets, when large green-belt sites were allocated to big unit developers, which may or may not have built on them because it was not in their business model to get on and build houses and so reduce house prices. Councils know that they can now invest officer resources not just in bringing forward new businesses and making life easier for businesses in their area, but in bringing through new developments, perhaps on smaller sites with local businesses, that will be sold to local people through local estate agents.

The entire package is an enormous step forward in local government finance. It will be very healthy for democracy and business creation around the country.