Local Government Finance Bill

Robert Neill Excerpts

Tuesday 10th January 2012 Commons Chamber

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

Some 26 Members have spoken in the debate, and I too apologise if I cannot follow every one of the interventions in detail. I appreciated the contributions of my hon. Friends the Members for Crawley (Henry Smith), for Mid Dorset and North Poole (Annette Brooke), for North West Leicestershire (Andrew Bridgen), for Ipswich (Ben Gummer), for Meon Valley (George Hollingbery), for Milton Keynes South (Iain Stewart), for Nuneaton (Mr Jones), for Folkestone and Hythe (Damian Collins), for Lancaster and Fleetwood (Eric Ollerenshaw), for Thurrock (Jackie Doyle-Price), for Harrow East (Bob Blackman), for Halesowen and Rowley Regis (James Morris) and for Rugby (Mark Pawsey), all of whom spoke from experience in local government and also, significantly and importantly, often from experience in business too, because one of the Bill’s objectives is to re-establish a proper link between local councils and the businesses that they serve and the communities who benefit from growth.

It has been in other respects, I confess, a classic curate’s egg of a debate, with some thoughtful and considered speeches and some of quite breathtaking banality. When I listened, with every respect, to the hon. Member for Warrington North (Helen Jones) talking about a golden legacy left by the previous Government, I realised we had finally entered the realms of illusion. While I bring the hon. Lady back to reality—and talking of experience—let me just tell her that this grandson of a London docker is not going to take any lectures on need from the party of Tony Blair.

The reality is that the Bill is a necessary measure to clear up the mess that the Labour party made of Government finance in 13 years. Two of the Ministers responsible have done their very best to defend a local government finance system which they regard as so wonderful that it should almost be a listed building, but which has been described by dispassionate observers as incomprehensible, complex, unfair and unable to provide a proper means of distribution.

It was interesting to hear references to the Lyons review, which the Labour Government sat on for three years, doing nothing. Lyons said:

“there are no coherent or systematic financial incentives that encourage growth either for”

councils

“or, more importantly for their communities.”

Labour did nothing; we are doing something.

“The current English model of equalisation is recognised as one of the most complex in the world”

said the Lyons review, which Labour set up and ignored when it did not give the answers it wanted. We are doing something about it.

The university of Plymouth—the hon. Member for Plymouth, Moor View (Alison Seabeck) spoke earlier—said:

“the four-block model is deeply flawed and generates an inequitable allocation of this major source of local authority revenue.”

The Labour Govt did nothing about that, although they had the information; we are putting it right.

Secondly, it is shameful—

[Mr Dave Watts (St Helens North) (Lab)]

Will the Minister give way?

[Robert Neill]

There has been little time, and I intend to make a few points, if I may.

Secondly, and particularly regrettably, there was the simplistic analysis and the misleading attempt in the debate to create a false north-south divide—particularly disgraceful, it might be thought, when one has only to look at the facts and observe that over the last five-year revaluation period, when the average business rate growth in England was 5%, the following authorities had business rate growth above the average, and therefore would have benefited more than average had our proposed system been in place: Doncaster, Durham, Greenwich, Hull, Liverpool, Manchester, North Tyneside, South Tyneside, Sunderland, Sefton, Stockton, Middlesbrough—[Interruption.] No, I am not prepared to take any lectures from Labour Members when they cannot get the facts right. I will give way once, briefly.

[Helen Jones]

Would the hon. Gentleman like to tell us how much was invested in those regions by the Labour Government to promote that growth—investment which has now been cut under his Government?

[Robert Neill]

That confirms my view that there is an illusion that the racking up of debt is somehow beneficial to this economy, and that is the reason why, I am afraid, in one aspect of the Bill, it is necessary for us to deal with the required deficit reduction in relation to council tax benefit—precisely because the only way in which we will get sustainable long-term growth in any parts of this country is by reducing the deficit that we inherited.

In tackling that important issue, the Bill seeks to meet the concerns of local government that the reform of the benefits system into universal benefit might have meant that there was no longer direct payment of those moneys to local authorities. Our Bill makes that point, but also gives local authorities the ability to design those savings in a way that reflects their needs and their priorities—which, as we all heard from the debate, vary from locality to locality. The unwillingness of Opposition Members to face that simple reality speaks volumes about the shoddiness of their analysis.

It is remarkable that, with one or two honourable exceptions, no attempt was made to pursue some of the important measures which have been put in place to safeguard the underpinning of the business rate retention system. Not only will there be a baseline to ensure that no local authority loses out at the start, but the system of tariffs and top-ups will be uprated according to the retail prices index so that the vast bulk of local authorities’ income will be protected, and at the same time, local authorities that are incentivised to encourage growth will always see some benefit coming through. Similarly, the hon. Lady referred to infrastructure, but she poured scorn upon the introduction of tax increment financing, which is exactly the means of unlocking some of that infrastructure—a model called for by all dispassionate observers, and for many years by Members of all parties, but consistently ignored by the Opposition. They seem to be stuck in—

[Helen Jones]

rose—

[Robert Neill]

I have given way once and I shall not give way again. I am sure the hon. Lady will have plenty of opportunity to raise these matters when we debate the Bill in Committee on the Floor of the House. I find it amazing that the shadow Secretary of State complained about that. It says it all that the first comment that the shadow Secretary of State could make was a debating point that it was objectionable that we should take such business on the Floor of the House, where every Member can participate, since every one of their local authorities is affected by the proposal. That suggests that the Opposition had very few other arguments to deploy. It is a little like the consistent trotting out of the inaccuracy in the growth figures across the UK. When we are reduced to a sort of political re-run of “Z Cars”, we know we have won the argument because the Opposition have nothing else to put into the equation.

The reality is that for the first time the Government have taken steps to redress the balance in a system that is recognised across the world as not working. There is not an adequate linkage with local authorities. I believe there are local authorities of all parties that want to do the best by their community, but they lack the tools and the mechanisms to create that by encouraging growth in their areas. We are replacing a flawed system with one which gives them the scope for growth. I had hoped that Members in all parts of the House would applaud that. However, we get a degree of churlishness and carping, indicating that because the Opposition did not come up with the plan, they regard it as unworkable.

We will talk through the details of the Bill as we examine it in Committee, but it is worth noting that very many of the independent responses to the consultation favoured this reform. It is worth bearing in mind the fact that in 2008-09 the Communities and Local Government Committee said that relocalisation would give local government an additional tool to pursue local recession-proofing policies, and it is worth recognising that the new local government network, not normally associated with the coalition side of the House, said that it recognised the potential that the growth incentive presents to create new private sector jobs and prosperity.

Hon. Members ought to wake up to reality and recognise that what is being put forward is an important and valuable reform. I hoped that rather than voting against it, they would have endorsed it and worked with us to make sure that we have a lasting system of finance for the future.

Question put, That the Bill be now read a Second time.