Local Government Finance Bill (Fourth sitting)

Rob Marris Excerpts

Thursday 2nd February 2017 Public Bill Committees

[Justin Tomlinson]

First, to be absolutely clear, I do not need any encouragement by the Whips to engage. I was elected in my own right. That intervention actually strengthens my point. Whoever is in government, difficult decisions have to be taken about public spending, and elected representatives are mindful of the people they are accountable to. It is often easier to focus decisions on some of the services—perhaps those that will directly affect businesses, since they will not necessarily queue up at the ballot boxes. However, under the proposed new system, protecting business income through business rates will become a greater priority for local authorities. We have rightly focused on new opportunities, but the change will also protect existing businesses and give them a greater ability to get an audience with decision makers and say, “By working together, we can not only grow but protect existing jobs.”

[Rob Marris (Wolverhampton South West) (Lab)]

The hon. Gentleman said that his local council does its best to encourage growth, and I am pleased to hear that. At the moment, his local council, on which I think he served, does not have the powers that the Bill will confer if it is passed. Is he saying that his local council would have tried harder to encourage growth and business if it had had those powers when he was a councillor?

[Justin Tomlinson]

The hon. Gentleman pre-empts some of the things I am coming to. I made it clear that I am very lucky to be the MP for an area with a local authority that is proactive in this respect, but that is not a given across the rest of the country. I do not disparage other councils, because all councils have to decide their own priorities. I represent a high-growth area where, for those who are interested, 8,100 jobs have been created since 2010. I know it is hard to believe, but that is greater than the average gate at the County ground. That is because the council recognises that it should be proactive. Could we have done that faster? Yes. We are landlocked by several local authorities that are less keen on additional development and growth. They have their reasons for that, and I respect those.

We will deal later with the pooling of some decisions and the sharing of some benefits. I was particularly taken by the point about Heathrow, which I will come back to, because I see further potential in that area.

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[Justin Tomlinson]

May I ask the shadow Minister to be ever so slightly patient? I am being tempted to fly in various directions. I will finish this point, then turn to that one.

Why does this matter? We all talk about new income opportunities and providing incentives, and trusting local authorities as the best vehicles to deliver those. That is incredibly important, but we seem to be missing the emphasis on creating jobs. As I said, 8,100 new jobs have been created in my constituency and unemployment has fallen by 60%, in part because new regeneration and development projects have attracted businesses from other local authority areas that have not supported the business community so proactively. Those things matter to the people on the ground, because they benefit directly. As I said, the 60% fall in unemployment is making a genuine difference to people. We have to protect the maximum potential of the incentives on offer.

[Rob Marris]

The hon. Gentleman said that some, not all, of the council areas surrounding his council were not as keen—I think that was the adjective he used—as his own council. What evidence is there that the changes in the Bill would make those surrounding councils, which he thinks are less keen, keener?

[Justin Tomlinson]

One of the elements that I have picked up is the principle of pooling, whereby different local authorities and local enterprise partnerships can sit down and work together and share the benefits of this growth. The whole point is that the Government will incentivise and reward those areas that are going to support additional growth and, therefore, there is an opportunity. I will give more detail on that shortly.

I come back to the point that this will work only if really big warehouses are built. Obviously, the smallest businesses are exempt from business rates through the small business rate relief. That is a hugely important policy that I hope continues because it benefits so many of our micro and small businesses. I ran my own business for 10 years and, just before I became an MP, I benefited for a year from that. It did make a difference in what was at that time a difficult financial climate.

We must remember that there is a significant number of small to medium-sized businesses that could be in offices not much bigger than this room but are larger than would qualify under the small business rate. So it is not just about getting distribution warehouses. That is an easy opportunity for some areas, particularly for those with lots of additional land and good transport logistics. It is also about these small and medium-sized businesses. It is about working with the existing small and micro businesses to help them to make that step up. I have been involved in a number of debates where it has been said that it is a lot harder to go from four-plus employees than to start a business because there are all the additional matters to deal with. The Bill provides an incentive for local authorities to have supportive forums, engage with communities and look at how they can shape the direction of their policies to encourage growth. Again, the bonus is that not only will that generate additional business rate income, which we all recognise that local authorities need, but it will help to create that next generation of jobs.

That was a powerful point about Heathrow. It is probably the case with any national infrastructure project that the communities closer to it get the vast majority of the inconvenience, while local authorities much further away will get some of the benefits. Take Heathrow: my constituency would gain significantly from Heathrow, for the convenience of residents going on holiday and for the businesses. So my local authority has written to the Government to say, “Please proceed with Heathrow.”

If I were an MP directly under the flight path, I would have a very different postbag. Again, that is where pooling could come in. Perhaps those local communities with the most inconvenience could go to the others to say, “We would be less minded to object, to try to delay and frustrate, if you would share some of the benefits that you would get.”

The principle of pooling can be expanded much further. Innovative council leaders would use that to go to talk to other leaders to say, “Look, we can work together here. You help us so that we are inconvenienced less or rewarded slightly more for the inconvenience that we will suffer. You will get your growth; we will get some of that.” Those are discussions that can be had and we have some very talented council leaders who, I am sure, would take advantage of that.

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[Justin Tomlinson]

As I said, I recognise that there is not a huge amount of difference between us, but my plea to the Minister is: stay strong. We were enthused by the reference to “Dad’s Army” earlier, my dad’s favourite programme. Despite the realities that we face, we need to stand firm and trust and encourage local authority leaders.

[Rob Marris]

I salute the hon. Gentleman’s generosity in volunteering a transfer from the people of Swindon and Wiltshire down the road to, say, Hounslow or Heathrow. May I caution him that while his area has done well, which is great, he might come to regret some of these measures? For example, he might represent an area that has a major car manufacturing plant, which, faced with the United Kingdom leaving the European Union, might decide to close down. The business rate scenario in that area—hypothetically, wherever it might be—might then look very different, and its representative might therefore look differently on redistribution.

[Justin Tomlinson]

That is a very interesting intervention. By pure coincidence, I happen to have the Honda factory in my constituency. Another MP raised that point on the Floor of the House during the Brexit debate. I gently remind the hon. Gentleman that Honda operations, which used to supply 100% of its cars to Europe three years ago, was ahead of the Government and public opinion and switched to global exporting of the cars: 80% of the cars now go globally. The impact of the referendum does not cause any issue at all, now or in the future, to the major employer in my constituency.

We could look at this hypothetically. There will always be issues beyond local authority control, because the world changes. Industries and technologies will change. That is why there are protections in the Bill. There would also be an incentive for local authorities to start planning and looking ahead. Local authorities and MPs get lobbied regularly by employers telling us either that things are going great and they are looking to expand, or that things are potentially going wrong. When we are told that things are going wrong, there will now be an extra incentive to engage with them to find a way forward.

I remember when Honda was struggling during the financial downturn. It was still producing all those cars but could not sell them. The local authority—this is a good example—found the company significant amounts of land to store those cars on. Again, I was lucky that we had a forward-thinking, proactive local authority. Every local authority is different and they have competing priorities; this is about ensuring that that priority is absolutely at the top.

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[Jim McMahon]

I do not want play car parking top trumps, but I have to highlight Oldham Council’s decision to offer two hours of free parking in the town centre.

[Rob Marris]

Who was the leader there?

[Jim McMahon]

I could not possibly shine a light on my own career. One of the proposals in the Bill that we will question later—I hope that the hon. Member for North Swindon will support us—concerns local authorities that are not part of a mayoral arrangement. They will have the ability only to lower business rates, and not to increase them elsewhere to make up the cost. A lot of areas with stunted growth would not be able to afford to do that at all.

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[Jim McMahon]

I absolutely agree with the professional response. The problem is we do not have proper checks and balances and we do not have a system of tariffs and top-ups and a proper safety net that catches people when they fall. We hear that that will come, but we have not seen the detail. We are being asked to agree a framework that allows this Bill to go through without actually knowing what impact it will have on individual local authorities across the country. It is a fundamental consideration when passing law that one understands the impact that law will have. We do not mind making bad decisions, but we should not be making bad decisions without all the information.

We are in a situation where spending on adult social care has declined by £65 per person in the most deprived areas of this country, but has increased by £28 per person in the least deprived areas. I would not resent that increase if it meant people got the care they need, but I do resent the fact that people who live in deprived communities are not getting the same access to social care that people in more affluent parts of the country are. We are meant to be one nation. We hear that all the time in the Brexit debate; when the Scottish National party kicks off about what is happening in Scotland we all say, “We are meant to be one nation. We take a collective responsibility for our nation.” Let us have a collective responsibility for adult social care and make sure that everybody gets the support they need.

[Rob Marris]

Does my hon. Friend agree that the social care precept construct will exacerbate those differences? Areas such as those that he and I represent will, in absolute and per capita terms, not raise as much money through the social care precept as advantaged areas will. I agree with him—good luck to advantaged areas—but we want those services for people who live in a wonderful place like Wolverhampton or a great place like Oldham.

[Jim McMahon]

That is the crux of the issue. Does this Bill really address a financial system that is under pressure and probably at breaking point—we all accept that it is time to renew local government finance and put it on a strong footing—or does it just reinforce historic inequalities across the country? Unfortunately, without the detail that we have requested a number of times we just cannot make that assessment. However, we are being expected to support this because we believe in devolution and have heard the calls from councils to have more responsibility and direction over their lives.

Let us be clear what the levers of change actually are. The Secretary of State will still prescribe what council tax increase can take place. By the way, they are saying that they are not going to report to Parliament on what that will be in the future—a minor point—and we are not going to get a local government finance settlement reported to Parliament in the future.

Not only is there no parliamentary scrutiny of this new world, but councils have not got the levers of control to reflect on the number of bands in their area. They cannot change the number of bands; they cannot introduce intermediary bands; they cannot have smoother transitions. They cannot even revalue properties—the last revaluation took place 26 years ago. Why is that? Central Government duck it year after year, time after time, because they do not want the backlash they would get at local level. Our councils are cross-party, by the way. This is about the Government not wanting to take the flak from the public for putting up council tax. That could be managed at a local level. There have been calls for areas to take that responsibility through some of the devolution deals.

Nor is there any ability to change the scheme of discounts. Fallowfield in Manchester, for example—where there is a strong student population living not in halls of residence but in terraced streets—is almost a whole ward occupied by students who pay absolutely nothing in council tax. Ask Manchester City Council if it would like the freedom to reflect that.

Even if we do not introduce that measure as part of the revision of council tax, we could put the burden on to landlords. Rather than put it on council tax, we could quite easily make provision for that within the business rates Bill. One might say that landlords will just put it on the rent, but if they own a three-bedroom terraced house in Manchester they will probably get £110 a week. If they rent that house to students, however, they will probably get £60 per student per room, so they are already earning far more by renting to those students than by renting to a family. It is right that somebody pays for the headroom to provide the services to the local community.

This is not, however, about whether we prescribe at local level. My point is that we are putting a burden on council tax and on business rates. We say that we welcome leadership at a local level and local innovation, but we are not giving local authorities the levers to affect the council tax or business rate base in their areas in the way that they have asked for.

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[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.

[Rob Marris]

On the issue of redistribution that the amendments cover, does my hon. Friend agree that we could look at it and say that the Government have put the cart before the horse? They have decided that there will be 100% devolution, but as the Minister said a moment ago, they have not yet decided which additional responsibilities they will devolve to local government. Almost invariably, additional responsibilities require additional expenditure. They are setting the finance out in the Bill, but they are not telling anyone what to spend it on until down the road.

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[Mr Thomas]

As I said, the hon. Gentleman’s contribution was inspirational in terms of recalling great literature of the past and the tale of Don Quixote and Sancho Panza. The evidence from the FSB was revealing: the economic incentives will not be anything like as significant as Ministers hope and the measure will help to drive further reductions in spending power, it would appear, without any evidence from Ministers to the contrary.

[Rob Marris]

Does my hon. Friend agree that this demonstrates a triumph of hope over experience? If an apparent incentive is not working, we double it. Well, vitamin A is good for people, but after a certain point doubling the intake of vitamin A kills them.

[Mr Thomas]

I am not going to comment on vitamin A. I do not have the medical skill.

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[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.

[Rob Marris]

It’s not coastal, is it?

[Mr Thomas]

It is not a coastal area, but it is surrounded by other local authorities that are part of the Lake District national park, which are similarly challenged in terms of constraints on the land they can use. One suspects that the natural pool of authorities that Allerdale council could work with would face similar challenges in terms of land being available for economic growth. That underlines the concern about redistribution.

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[Mr Thomas]

With respect to the hon. Gentleman, that is precisely my point. In terms of business rates, the authorities that will benefit most from a third runway at Heathrow will be the local authorities in the immediate surrounding area. Without effective redistribution, there might be some additional business rates from businesses operating in Cornwall that are perhaps attracted to Britain as a result of a third runway, but primarily the main authorities that will benefit from the increase in business rates growth from that third runway will be the local authorities in the surrounding area.

[Rob Marris]

May I caution my hon. Friend on this line of argument? The local authorities adjacent to Heathrow will have to spend shedloads more money dealing with the health problems caused by a deterioration in air quality and will be spending more in social care.

[Mr Thomas]

I am not going to get into issues around air quality.

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[Mr Thomas]

I am very grateful, Mr Gapes, for your direction that we should not talk about the housing crisis in London. However, you will realise that the revenue support grant helps to provide finance to address some of the concerns about homelessness. Obviously, one of the reasons for wanting to retain, potentially, some revenue support grant within the current local government system is to make it easier for financially challenged local authorities to deal with homelessness and some of the other issues that we have mentioned.

My last point, Mr Gapes—

[Rob Marris]

Shame.

[Mr Thomas]

For now. My last point is to ask whether there is a whole series of other impediments to economic growth. The implicit assumption that Ministers always seem to make in relation to the Bill is that local government is responsible for a lack of economic growth. Ministers are careful not to say that in such specific and grand terms, but that is the implicit charge behind the Bill.

One thinks of the difficulties in gaining access to finance that many small businesses experience as just one example of an impediment to growth. Therefore, local authorities deserve more recognition from Ministers, and not only those run by Conservative council leaders but others—such as Manchester and Oldham, and some in London, such as Hackney or Haringey—where there is a championing of the business community at local level and a real desire to see economic growth.

Surely, keeping the provision in the Bill for a little bit of revenue support grant might be, in the long run, one way of dealing with some of the issues on local government finance. That is worth thinking about by Ministers.

[Rob Marris]

It is, as ever, a pleasure to appear before you, Mr Gapes.

I am intrigued that my hon. Friend the Member for Harrow West is leaving as soon as I have started talking. [Laughter.] He has probably heard what I am going to say and agrees with it; I hope so.

I will focus on clause 1(3), which deals with the abolition of the revenue support grant, and to the surprise of some, I will actually be brief, Mr Gapes. I am concerned about that measure. We have heard talk of incentives but no evidence of that. I am concerned about the inequalities that the abolition of the revenue support grant may lock in.

[Kevin Hollinrake]

What evidence did Labour find before it introduced the local authority business growth incentive scheme, which served a similar purpose?

[Rob Marris]

There is a lack of evidence. Things do not work. Now we have this Bill, which is supposed to work. The 50% has not worked, so we are now talking about the 100% not working. I am not the Government. It is not my party saying in the explanatory notes—the Minister said this more than once on Tuesday morning—that the Bill will provide incentives. I understand that concept. It is just that a bit of evidence would be welcome.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[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]

We may get on to that when we discuss schedule 1, because paragraph 4 contains the tariffs and top-up provisions. Incidentally—I will be brief, Mr Gapes —I read that as a slush fund for the Department.

[The Chair]

Order. We are on clause 1 stand part, so let us not get on to schedule 1.

[Rob Marris]

I realise that, Mr Gapes, but it relates in terms of what will come without the revenue support grant.

[The Chair]

Please do not go on to the schedules now. We are dealing with clause 1 stand part.

[Rob Marris]

I apologise. I was tempted by the Minister.

[The Chair]

I understand. Please resist the temptation.

[Rob Marris]

I give way to my hon. Friend the Member for Harrow West.

[Mr Thomas]

Is my hon. Friend aware of figures I have seen from the House of Commons Library that suggest two thirds of businesses do not pay any business rates at all? If the point about economic incentives is right, authorities have to get particular types of businesses. If they cannot, they are in trouble—all the more reason, surely, to retain provision for revenue support grant to be offered, to help authorities that cannot attract that type of big business.

[Rob Marris]

My hon. Friend is quite right. We touched on the issue this morning, so I will not rehearse it again, but the whole thrust of the Bill is that councils need the big hitters because, as he points out, small businesses—understandably, to encourage the growth of small and medium-sized enterprises—will not be paying business rates. If they get a big hitter, there is a problem if that big hitter moves away and there is no revenue support grant to make up for it.

There is a real problem for disadvantaged authorities such as mine and those up in the north-west, such as the constituency my hon. Friend the Member for Oldham West and Royton represents, where there will be a crisis in local government funding. The underpinning support within our society in terms of social cohesion and solidarity provided by the revenue support grant will, under clause 1(3) be withdrawn. I urge the Government to look at that again, because otherwise they will run into the same problems they have run into with the so-called fair funding formula for schools, which is causing uproar around the country, including on the Conservative Back Benches.

[Mr Thomas]

Can my hon. Friend see a case for the retention of at least some revenue support grant in a situation where an authority with a low business rate base receiving a top-up decides to reduce the business rate multiplier? There is a risk that other local authorities paying a tariff will be effectively subsidising the reduction in business rate multiplier in that area, hence the need for the revenue support grant as an alternative.

[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.

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[Rob Marris]

I will not make the same mistake twice and get tempted off-piste by that, because we will discuss the multiplier later in the Bill.

[Mr Thomas]

I hope I can tempt my hon. Friend a little more on the Minister’s intervention. That is probably the first bit of clarity we have had on how the system might work in practice. The Minister appears to have said that if an authority reduces the business rate multiplier, no top-up will be available to it, even if it has a low business rates base, making it even less likely that authorities will choose that option. Keeping revenue support grants, surely, is potentially a better alternative for a local authority worried about its long-term financial position.

[Rob Marris]

With his brain like quicksilver, my hon. Friend was quicker than I was to pick up that. I cannot take credit for wheedling that out of the Minister—it was entirely serendipitous, in as much as it happened. It is, however, interesting that we have a little more clarity, I certainly agree there. I urge the Government to think again about subsection (3).

[Jim McMahon]

We have had a full and frank debate. We have just, only minutes ago, managed to glean more information—more in that second than we have had in hours of sitting or the evidence sessions about where the intention sits. Had the debate earlier been more honest and open, we could have dispensed with much of it today. Perhaps the Minister will be generous in the sharing of information, which he showed to be possible a few minutes ago.

Clearly, the reason the levy pool is not required is that the desire is for local government, not the Government, to administer the scheme. That would be in line with calls from local government, which has asked for an independent body to be established to look at redistribution formulas so as to ensure that is done in an independent way. That is something we are open to discussion about, provided there is a discussion to be had. I encourage the Minister in the spirit of openness to come forward with how that scheme will work in practice.

If there is an independent scheme, it would have potential and merit. We see that in the health service, where a separate and independent body is established to look at health funding and distribution. Something similar in local government potentially has merit, provided it has the freedoms. Whatever system is put in place also requires parliamentary scrutiny so that it can be held to account. A number of provisions in the Bill—the removal of the requirements to produce an annual statement of the funding formula and to bring forward the council tax increase cap—do not sit well with democrats because they reduce the possibility of proper parliamentary scrutiny.

The hon. Member for Thirsk and Malton referenced a review that is being undertaken by the Communities and Local Government Committee. I have a great deal of time for the hon. Gentleman. He puts a lot of time into ensuring that such reviews are carried out in the right way. I give credit to him and his Committee for doing so. I hope he does not mind me saying, however, that he has provided a half-truth of the review—[Interruption.] Okay, he was 100% truthful about the truth he provided, but silent about the remainder of the recommendations in the report.

The review said, absolutely, that local government had been asking for freedoms and that there was broad support for 100% retention, but that some big and unanswered questions potentially undermined the success of the programme. That is what the report says. The interim report has been provided to the Government, and the response is being awaited. In particular the report talks about how volatile the situation could be if the system is brought forward, without proper scrutiny, while at the same time the revenue support grant is taken away. The Committee was clear at the time that removing the revenue support grant without the checks and balances in place carried inherent risk.

The report also made points about fairness, equality, distribution and what would be done for areas where the business rate base and take were low. The CLG Committee was, absolutely, in favour of retention, but a number of other truths were relevant to its recommendations and that context was needed to give a firmer view, so there is still a long way to go.

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[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.