District Council Finances

Rishi Sunak Excerpts

Wednesday 1st May 2019 Westminster Hall

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate my hon. Friend the Member for Rugby (Mark Pawsey) on securing the debate and on his work in this place to champion the role of district councils, which he does with passion and eloquence. I have been in this job for just over a year; I have enjoyed all the work I have done with him, and district councils are lucky to have such a champion for their cause in this place. I also pay tribute to the hon. Member for Stroud (Dr Drew), who deserves credit for his focus on the issues concerning district councils.

While I am on the subject, my good friend John Fuller, the president of the District Councils’ Network, is an irrepressible advocate and champion for district councils. I am sure the only reason there is slightly lower attendance at the debate than usual is that everyone is out campaigning hard in their local communities for the district council elections. I join the hon. Member for Oldham West and Royton (Jim McMahon) in wishing everyone well on Thursday.

We are here to discuss the “Delivering the District Difference” report, which was released some months ago. I was pleased to be able to attend its launch, and I pay tribute to everyone who contributed to the production of that fantastic document. As my hon. Friend the Member for Rugby pointed out, it highlights that district councils are at the heart of our communities and our system of local government. They cover two thirds of the country and deliver 86 out of 137 essential local government services.

I am fortunate to come from a two-tier area, with fantastic district councils in Hambleton and Richmondshire. I have seen as I have travelled around the country visiting countless other districts that they deliver high-quality services, ensure excellent value for their local taxpayers and, as we heard from all the Members who contributed, remain incredibly close and connected to their communities. We should be very grateful for that.

I am pleased to say that this Government are determined to continue supporting district councils. We heard about the seven points in the report, but I thought I would frame my remarks by looking at the two things the District Councils’ Network highlights as the key roles of district councils: building stronger economies and providing better lives for their citizens. In discussing those two overarching roles, I hope to pick up at least the seven specific points in the report, as well as others that Members raised.

District councils are integral to the UK’s future prosperity. We talk a lot about the Budget, and my right hon. Friend the Chancellor is an important figure, but our prosperity as a nation will be built bottom-up, community by community, neighbourhood by neighbourhood and district by district. District councils have a vital role in driving economic growth in their areas—indeed, only that economic growth can pay for the vital public services that we all care so much about.

When talking about what we have done, business rates are a great place to start. The business rates retention scheme is yielding strong results; local authorities estimate that they will keep more than £2.5 billion in revenue from generating growth this year, on top of the core settlement funding we debate so much in this place. In the current year, there are 15 75% pilot pools, which were selected through a competitive bidding process. They cover 122 local authorities, 83 of which, crucially, are district councils. We heard from the hon. Member for Stroud about the importance to his area of being part of that pilot programme last year. We plan to deliver 75% retention to the entire country from next year. That will give districts even more control of the money they raise through their own economic success.

On a related theme, building stronger high streets is one of the great pressing issues of our time. This Government understand that a thriving high street is at the centre of any local community’s vibrancy and success, and it is a mark of our confidence in district councils that we have trusted districts to lead the way. We announced a £675 million high streets transformation fund in the last Budget, and, as we are seeing, districts will take the lead in applying for those funds. The changes we are making to our planning system are pivotal to giving districts the power they need to shape their local high streets and areas. District councils are also at the heart of the Government’s ambition to achieve nationwide full-fibre broadband coverage by 2033. The revised national planning policy framework requires priority to be given to full-fibre connections in existing and new developments.

While I am on the topic of growth, I want to pay tribute to the innovative work across local government to drive up efficiency and creativity. We have seen the merging of district councils in East Suffolk, West Suffolk, and Somerset West and Taunton, as district councils seize the opportunity to improve services and drive efficiencies for their communities. We heard from my hon. Friend the Member for Rugby about the creative shared working agreements that his local council has entered into, striving at every turn to provide better value for money for its residents by improving service delivery. We also heard from my hon. Friend the Member for South Leicestershire (Alberto Costa), who is no longer in his place, about the fantastic work by Harborough District Council and the efficiency it has created with its neighbour, Blaby District Council, to ensure that its taxpayers benefit from low council tax bills and high-quality public services.

Districts are well placed to innovate in that way. Given their smaller size, they can be agile and quick to respond. I see them as the entrepreneurial arm of local government, as was demonstrated in the recently announced £7.5 million local digital fund, which I was pleased to initiate and launch. Two of the successful bids for the first round of funding included a host of district councils, which will use that funding to explore ways they can use cutting-edge artificial intelligence technology and better data management in their authorities. I have repeatedly highlighted the social prescribing model of Adur and Worthing Councils as one that others should look to follow. They have been consistently at the cutting edge in driving digital transformation in local government.

Economic growth is not everything we should be focused on. As the District Councils’ Network has mentioned, creating better lives for our residents is equally important. Indeed, district councils are at the heart of helping the most vulnerable in our society to live those better lives.

We saw in the report and heard in the speech made by my hon. Friend the Member for Rugby much about the important role that district councils play in prevention. Although clearly we are not fully there yet, we have seen Government responding to that need and recognising the important role that districts can play. For example, the disabled facilities grant is part of the Government’s commitment to help older and disabled people to live more independently. We established the grant to help local authorities to fund home adaptations, keeping people in their homes. The grant has more than doubled to over £500 million this financial year. Indeed, Rugby District Council has been allocated more than £2 million since 2015. Hopefully that represents a positive step in the direction of recognising the role that districts can play in prevention. If not fully the way to a precept, it is certainly a step in the right direction.

My hon. Friend also touched on homelessness and rightly highlighted that districts are on the frontline of reducing homelessness. Following the introduction of the Homelessness Reduction Act 2017, between April and June last year more than 10,000 households secured their existing accommodation or were helped to find alternative accommodation through the new prevention and relief duties. Local authorities received an additional £72 million to carry out the new duties and are leading policy implementation through their role on the homelessness advice and support team.

We heard from the hon. Member for Oldham West and Royton about the importance of parks, and I fully agree. Parks create communities that we want to live in, and make people proud of the area that they call home. They are the green lungs of our society.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

One thing that district councils do is planning, ensuring that we have an ordered and adequate amount of housing land available and so on. Is it not also important that there should be adequate funding for enforcement? In my area we have the two excellent district councils, North Hertfordshire and East Herts, but East Herts is having to spend a lot of money tackling cases of intentional unauthorised development, particularly by Travellers. Such action is very expensive. Does my hon. Friend agree that adequate funding needs to be allowed in all settlements for such enforcement?

[Rishi Sunak]

My right hon. and learned Friend makes an excellent point about an issue on which he has represented his constituents many times in this place. Just last week I responded to my hon. Friend the Member for Mole Valley (Sir Paul Beresford) in an Adjournment debate on this topic, and I highlighted that exact issue. Enforcement is important, as a recent consultation picked up.

Although this area is not my specific responsibility, the Secretary of State is considering, and I think has already committed to, making more funds available later this year—£1.3 million, I believe—to district councils through the planning delivery fund to tackle this exact issue, and I know that my colleagues in the Home Office are considering greater powers for the police and other bodies to enforce in the first place. I hope my right hon. and learned Friend knows that the Government take seriously the inconvenience and distress caused to settled communities through illegal and unauthorised encampments, and that we are committed to making improvements.

It is important that parks and green spaces are well funded. That is why the Government launched the £1 million pocket parks fund in 2016, which led to the creation of more than 80 new green spaces for local communities to enjoy. That fund had a phase 2 earlier this year, with almost 200 new pocket parks created. Districts are again are playing the lead role in that work.

[Jim McMahon]

The Minister needs to demonstrate some balance and reflect that there have been real-terms cuts in open space funding of 41% and in sports and recreation of over 70%. If the Government are committed to parks, open spaces and a quality environment, what will they do to replace the funding cut so far?

[Rishi Sunak]

Funding for all green spaces and such services is not ring-fenced by central Government. It would not be right for me, sitting in Whitehall as a Minister, to dictate to every single local authority how it should prioritise its resources between social care, homelessness, parks and planning enforcement. Every area will have different priorities, and it is right that local authorities make those decisions. The Government recently unveiled a range of initiatives around parks—not just the pocket parks programme but an additional several million pounds of funding for the renovation and upkeep of parks or children’s playgrounds that have fallen into disrepair. We have established the Parks Action Group to bring people from the industry together, and we funded the Heritage Lottery Fund and the National Trust with money for their accelerator to innovate new parks models. Indeed, we are also developing a new apprenticeship standard for 21st-century parks managers. On parks and green spaces the Government are firmly on the front foot, supporting local areas to ensure that their green spaces are there for their communities.

To the hon. Gentleman’s broader point, I would be the first to acknowledge that all local authorities, whether district, upper tier or unitary, have faced difficult times over the past years. They deserve enormous tribute for the fantastic job they have done in ensuring high-quality public services and public satisfaction in what they are doing at a time of constrained finances. That is thanks to their innovation and creativity, as was put so well by my hon. Friend the Member for Rugby. We all know why we were in that situation: when the Government came into office in 2010, we were left with a £100 billion deficit, and savings had to be made across government. Again, I pay tribute to those in local government for playing a starring role in helping to bring our public finances back to a sustainable position.

Housing was mentioned by many speakers. Building the homes that our communities need is another great challenge of our time, and the Government have placed trust in districts to help solve it. One key recommendation in the report was the removal of the housing revenue account borrowing cap. That was the No. 1 request from districts, and I am pleased that the Government have responded to that, which has unleashed the potential for districts to get on and build the homes we need. Similarly, the Government listened to district council calls for continuity and stability on the new homes bonus and responded by committing an additional £20 million to maintain the baseline this year, ensuring that district councils will receive more than £300 million in new homes bonus payments in 2019-20. Through all these measures, we are making every effort to create a housing market that works for everyone, and in doing so creating a country that works for everyone.

The hon. Member for Stroud mentioned uncertainty, and I acknowledge that issue. We are at the end of a spending review period, so naturally there will be some uncertainty as one set of programmes comes to an end and we wait for the spending review for certainty about what will replace them. The Government recognise the role that incentivising districts and authorities more generally to build houses has played in helping to get the number of new homes up to its highest in more than a decade. There were more than 220,000 last year, and I am sure that at this moment my hon. Friend the Minister for Housing is considering how best we can continue to incentivise local authorities in the new spending review. I am always committed to providing certainty as early as possible for councils of all stripes so that they can make the long-term plans that we have heard are so important.

It is worth dwelling for a minute on housing. I visited the constituency of my hon. Friend the Member for Rugby to see the fantastic work of his local council, replacing old high-rise blocks and improving the stock of houses for social rent. As my hon. Friend said, the council deserves credit for being on the front foot, forward thinking and keen to get on and provide the homes that our young people, and indeed all our communities, need.

I thank my hon. Friend for calling the debate on this vital issue. On my list of seven things, the one I have not touched on is freedom and flexibility. Perhaps this goes to the heart of the tension between the Government and the Opposition on how much to trust local government to get on with it. I am firmly and instinctively a localist. I want to be able to give and devolve powers down to the lowest possible level. It is good for our democracy and for our civic society if decisions are taken closer to the people they affect. I will be arguing where I can during the spending review process for greater freedoms and flexibilities for all local authorities. Indeed, at every meeting and engagement I go to, I ask local councillors, whether they are from parish or town councils all the way up to big metropolitan devolved mayoral administrations, for the ideas they have that I can debate, kick around with the team and put into the mix when we come to the spending review.

[Jim McMahon]

rose—

[Sir Oliver Heald]

rose—

[Rishi Sunak]

I will first take an intervention from the hon. Member for Oldham West and Royton.

[Jim McMahon]

It is part of the nature of this place that we can be mischievous at times, but let us not be under any illusion: this tension is not caused by trust in local government. We all respect the role that councillors play and we trust them to know what is best for their area. Fundamentally, this is about the sustainability of local council finance and the historical local tax bases that inform an entirely devolved financial model. That is the only tension—this is not about trust; it is about financial sustainability.

[Rishi Sunak]

I thank the hon. Gentleman, and I will now take an intervention from my right hon. and learned Friend.

[Sir Oliver Heald]

Does the Minister agree that freedom and flexibility, particularly in housing, can provide settings for housing estates that fit the local area? Hertfordshire has a lot of garden conurbations—Welwyn garden city, Letchworth garden city, and so on—and we try to create settings for future buildings that include those garden features where possible. Other parts of the country also do their thing well, and over the past 30 years, housing settings—particularly public housing, but also more generally—have improved hugely, and that is down to the offices of district councils.

[Rishi Sunak]

I firmly agree with my right hon. and learned Friend. Planning and housing can be contentious in local areas, but one way to relieve that tension is to ensure that local communities feel that they are shaping the developments taking place around them. I saw that when I visited my right hon. and learned Friend’s constituency, and his point is well made.

The hon. Member for Oldham West and Royton asked the Government to be radical. They have been radical by introducing neighbourhood planning. They have devolved planning power to local communities, often at parish or town level, so that that community can create its own neighbourhood plan, supported financially by incentive payments over the last few years. That plan is then given significant and strong legal weight in the planning process, which puts local communities, at a small level, in control of their destinies on the ground. That is central Government sitting here in Whitehall, being radical, and trusting and empowering local communities to construct the housing that they need and think appropriate for their areas.

I can debate this issue with the hon. Gentleman, but we must recognise that there are two sides to this coin. If one argues for more freedom, flexibility and trust in local government, one must also believe that local governments are able to shape their own destinies. It is no good saying that local governments are not able to sustain themselves and require constant handouts from central Government, yet also saying that they should be empowered to do everything they want. If central Government are shovelling money around the system, national politicians will always rightly be in charge of that system of redistribution. The more that money is raised locally, the more that local government will have the right to say, “Let us do things the way we want. You do not have the right to dictate to us what we do because you do not provide us with our funds.” There will of course be differences in the abilities of different areas to raise funds, and there will always be some element of redistribution, but local areas cannot be considered completely static entities with no ability to be creative, dynamic and improve their financial sustainability.

[Jim McMahon]

If the Minister is arguing in favour of growing the local tax base, we are entirely in agreement. If local authorities can demonstrate that through their actions they have grown the local economy, and therefore the local tax base, we should discuss how they benefit from that success. That is not the same, however, as the historical inherited tax base that many local authorities rely on for their funding, which includes the housing stock and business rate base. We need to separate out the two things. We need fair funding to ensure that public services are properly and sustainably funded, and a proper incentive for local authorities to grow the local economy and tax base.

[Rishi Sunak]

I am pleased to say that that is exactly what the Government are doing. The fair funding review is a blank sheet of paper on which we can consider the relative needs of local areas. It is bottom up, and driven analytically and empirically by the evidence, so that we figure out the right element of need for each local area, and then add a system of redistribution to ensure that funding gets to the right place. I am pleased the hon. Gentleman supports the incentive mechanism. An argument I hear a lot—I think I have also heard it from him, so I am glad if I misheard it previously—is when councils say that they have no ability to grow and will therefore need more handouts. I would take issue with that. Yes, the starting bases may be different, but that does not mean that areas cannot look creatively and entrepreneurially at how to create growth and generate resources for their local community. I believe in growth and driving prosperity locally, because I think that is the only sustainable way to pay for public services. Whether money comes from national or local government, it will come only if the economy is growing and generating tax revenue, and that is why I am keen to focus the conversation on driving economic growth.

This has been an excellent debate, and I was glad to hear all the contributions on the importance of district councils. Funding is important, and the big point is the elimination of the negative revenue support grant—I am not entirely sure that the hon. Member for Oldham West and Royton supported that when we unveiled it in the local government finance process. That is worth almost £153 million to the local government sector. District councils were big beneficiaries of the Government ensuring their commitment that the business rates baseline would not change over that period. I am glad that the Government were able to meet that big ask, which benefited 140 shire districts.

We all agree about the vital role of our district councils, their connection with communities and proximity to those affected by their decisions, and the importance of those decisions in ensuring that communities enjoy stronger local economies and better lives. It is my pleasure to represent district councils for the Government. I pay tribute to everything they do, and will continue to champion them for as long as I have this role.