Budget Resolutions and Economic Situation

Robert Neill Excerpts

Monday 21st March 2016 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

I could not disagree more with the hon. Member for Southampton, Test (Dr Whitehead) about the impact of this Budget on local government. The Budget should be welcomed by all in local government with self-confidence and belief in their own communities. The opportunities offered by the devolution of business rates and other financial measures are real and should be seized.

The business rates devolution is particularly welcome. I note that in opening the debate the Secretary of State properly recognised that where, as a result of national policy, the tax base is reduced by increasing the reliefs on small businesses, that will be compensated for by the section 31 grant. I hope the Minister replying to the debate will take on board the importance of that being uprated on any future changes of Government policy, so that the tax base of thrifty and effective local authorities is not thereafter eroded.

The second point I want to make is on the setting of the baseline for the retention of the business rate, on which the Department is currently conducting a six-month consultation. That is a complicated matter. It is nonsense to suggest, as one hon. Member did earlier in the debate, that business rate-rich areas such as Westminster will retain everything. There is always an element of redistribution, but we have to get the system right, because we do not want too frequent resets—there has to be a long-term run to give local authorities a real incentive to invest.

I hope we will use the ability to calculate the baseline to do greater justice to authorities such as mine in Bromley that have a long record of efficiencies. In the past, we have tended to calculate local government finance settlements on the basis simply of a needs-versus-resource matrix. That does not take account of the fact that some local authorities have been more effective and efficient than others in using their resource. When we look at the baseline, I hope we will find a measure that recognises and rewards councils with records of historical efficiency. It is perfectly possible—indeed, it has already been demonstrated—that we can achieve comparable unit costs for services in similar authorities. We need to look at that carefully in setting the baseline, because it will give a further incentive to authorities that use their money well. That is an important step forward.

Finally on business rates retention, I welcome the news that the Greater London Authority will have 100% retention advanced to 2017. The logic is surely—I hope the Minister will confirm this—that that should apply to the London boroughs too, because they are the collecting authorities for both tiers of business rates, and they often participate together in funding the kinds of ambitious devolution project in London that we are keen to bring forward. The logic, therefore, is that all of London should, rightly, have 100% retention at the earliest opportunity.

--- Later in debate ---

[David Mowat (Warrington South) (Con)]

I want to speak about two issues: the northern powerhouse and devolution. Neither of those initiatives is perfect, and I have some thoughts and suggestions on both, but they are an awful lot better than anything we have seen for the last 20 years. The Opposition might want to remember that.

I also want to talk about the direction of travel of the Budget. When we came into office, £1 was being borrowed for every £4 that was spent. We are trying to fix that. Labour Members are right; it has taken us longer than we thought. Perhaps they wanted us to cut harder. This evening, however, we have heard that as well as the bedroom tax being wrong, every single cut that has been made was wrong. The NHS apparently needs more, and the police need more. We have even heard from the right hon. Member for Birmingham, Hodge Hill (Liam Byrne)—this is a new one—that the pension age should not have been changed. The hon. Member for Harrow West (Mr Thomas) has told us that the schools funding formula is wrong. I was waiting for an intervention, but it did not come. The hon. Member for Copeland (Mr Reed) talked about the need for credibility. Labour Members would be credible if they occasionally said, “That cut is reasonable,” instead of just saying, “It is all wrong.”

[Robert Neill]

Does my hon. Friend agree that the real lack of credibility is in the failure to recognise that some public services can be based only on sound economics, and that unfunded costings and more and more debt constitute cruelty, not compassion?

[David Mowat]

It comes back to credibility. The hon. Member for Copeland made a plea for credibility from his Front-Bench team—a plea that, I fear, has fallen on deaf ears. It is true that we have had to make cuts, and I do not think that anybody likes to do that. I do not think that the cuts are ideological, but they are necessary to get from that 4:1 ratio to something close to balanced. It looks as though we made a mistake in this Budget; that has been acknowledged, and it will be fixed. The Labour party’s contribution has not been to say, “That was a mistake,” but to say, “Everything is a mistake.” That is an extraordinary position.

We had a lecture this evening from the Scottish National party, which was particularly interesting, because it is the progressive party in this place. We heard about what the Scottish Government are doing on homelessness, and how much better that is than what we are managing in England. If the SNP was progressive, and if it really cared about homelessness in England, its members would look at the Barnett formula and say, “We will go for a formula based on need. We will not just take everything that we can get, as our major policy initiative, and still call ourselves the progressive party.”

Before I move on to talk about the northern powerhouse, I have a point to make about tax cuts. “Tax cuts for millionaires”—we have heard that, have we not? Capital gains tax has been cut from 28% to 20%. I do not particularly approve of that, but at 20% that rate is still 2% higher than it was for the entire period of the last Labour Government. One could not make it up.

I said that I was going to talk about the northern powerhouse. I will not talk about it for very long, other than to say this. The problem that the northern powerhouse is trying to fix is the difference in gross value added between the north of our country, the English regions, and London, in particular. We are very London-centric. That difference reached a peak in 2009, in the last year of the previous Labour Government, when the City was allowed to run berserk. It is right that that has been fixed. I see that the Secretary of State is in his place, and I have got time to make one final point. I would like clear metrics to be assigned to the northern powerhouse initiative for GVA and transport infrastructure. It is rather hard to equate the money being spent on Crossrail 2—£28 billion—with any sort of real intent around the northern powerhouse.