Local Government Finance

Robert Neill Excerpts

Wednesday 22nd February 2017 Commons Chamber

[Sajid Javid]

There has been a reset for Lancashire, so it should not lose anything. If the hon. Gentleman wants to provide me with any further information that he thinks we may not be aware of, I will be happy to take a look at it.

The authorities that I have just mentioned will be able to keep more of the growth in their business rates income with no impact on the rest of local government. We plan to undertake further pilots in 2018-19 in areas without the devolution deal, including two-tier council areas.

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

I very much welcome the roll-out of these pilots right across the country; it is entirely the right approach to take. The Secretary of State’s immediate predecessor came to Bromley to meet the leader and chief executive of our council when they expressed an interest in Bromley becoming a pilot. Will he take it from me that that offer and that interest still stands, and perhaps he might like to come to Bromley to discuss it with us?

[Sajid Javid]

I know that my hon. Friend speaks with a great deal of experience when it comes to matters of local government. I am more than happy to meet the leader of Bromley Council, and I hope that my hon. Friend will join me in such a meeting.

We plan to undertake further pilots for the two-tier authorities, and I welcome applications from any council waiting to take part in this second trial. The nationwide roll-out of 100% business rates retention will take place across England in 2019-20. Earlier this month, my Department published a consultation seeking views on exactly how the system should look.

[Sajid Javid]

Well, there is not much to work out. That ridiculous claim was demolished on the day that it was made.

[Robert Neill]

If the Secretary of State looks at page 34 of the local government finance report, he will see the Surrey-Croydon business rates pool set out in the statement.

[Sajid Javid]

I thank my hon. Friend for that.

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[Mr Betts]

I have some sympathy with the Secretary of State’s points about revaluation. I accept that it is fiscally neutral and that it reflects the change in property prices, but perhaps the Government did not help themselves by delaying it for two years. He has referred to the difference between business rates for high street premises and those for out-of-town shopping centres. Is he therefore considering a more fundamental review of the whole basis on which valuations are made, to try to better reflect the proper cost to businesses on the high street and in out-of-town centres?

[Robert Neill]

rose—

[Sajid Javid]

I will come to the point made by the Chair of the Communities and Local Government Committee in a moment, but first I will give way to my hon. Friend the Member for Bromley and Chislehurst (Robert Neill).

[Robert Neill]

I hope that the Secretary of State will not think me discourteous if I disappear to chair my Select Committee in a moment. I welcome his statement and the tone in which it was made. Many of us have raised concerns about the issues that he touches on, and particularly about the fact that land values are high in areas such as mine—but that is no consolation to the independent trader on the high street. Will he undertake to meet me and other London and south-east Conservative MPs who have done some detailed work on this, to see how we can best find a constructive way forward?

[Sajid Javid]

My hon. Friend makes an important point about the challenges that businesses, particularly those on the high street, will face in areas such as Bromley. I would be more than happy to meet the leader of his council and other local representatives to learn more about those challenges.

Property-based business taxes have been around in one form or another for many decades—centuries, even. Nobody would argue that the current system is perfect, and it is right to ask whether the time has come for some kind of reform. The Treasury’s 2015 consultation showed little appetite for replacing the whole business rate system. It remains a vital part of the local government finance settlement, and its importance will only increase with the introduction of business rate retention. However, with underlying concerns about globalisation, international tax structures and the struggle between the high street and the virtual world, there is clearly room for improvement. We will look closely at all possible steps to make the system fairer and more sustainable in the short and long term.

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

I start by welcoming the Secretary of State’s statement, which was constructive both in content and tone, and I am personally grateful to him for the assurance he gave me earlier following my intervention regarding his willingness to work with my London Borough of Bromley on a pilot for business rates retention. Bromley is ambitious to grow its business base and has the scope, the ability and the connections into central London, as he probably well knows, to do so. So we will be pleased to work with the Government on that.

I also support the philosophy that underpinned the statement—the continuation of the move towards four-year planning, as longer term planning for local authorities is desirable, and the completion of the move towards 100% business rates retention. When I was at DCLG, the then Secretary of State, my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles) and I were able to make a start on that with the Local Government Finance Act 2012, and I am delighted to see my successor, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), in his place and taking through the final bit of that legislation now. It is an important devolutionary step, which I welcome. I hope it will not be the end of devolutionary steps for local government finance.

As we look at devolution deals, it is important to recognise the strong argument for more and more local authorities to become dependent on raising their own resources rather than central Government grant. Compared with many of our competitor countries, we have a narrow suite of revenue-raising powers for local government. We should perhaps think further about whether other taxes could be localised in a cost-neutral way. Obvious examples include stamp duty land tax and so on. That is further down the track, but it is important to be prepared to look seriously at that option.

I am sure that the Secretary of State will be aware of the work of the London Finance Commission—I declare my interest as a member of it—which is a cross-party commission established by the Mayor of London, following on from the previous London Finance Commission established by my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) when he was Mayor of London. Sensible suggestions have been put forward to build on the devolving approach that Ministers are currently developing. That is desirable.

Given the financial constraints that the Government have inherited, the settlement itself is sensible, and I particularly welcome the way in which a number of grants will be rolled into business rate retention, which makes for a more sensible and appropriate approach. I am glad, too, that following representations made by local government, the devolution of attendance allowance funding will not happen. Authorities such as mine have a growing elderly population. In fact, Bromley has the highest population of pensioners in London—I have not quite tipped over yet, but I sometimes regard it as forward planning—and such pressures are important.

I welcome the commitment to doing more work to join up health spending and adult social care. I hope that the Secretary of State will talk repeatedly with his colleague, my right hon. Friend the Secretary of State for Health, about implementation. All too often, I have found, in my own area and from contacts elsewhere in local government, that it is not working on the ground as one would wish. The better care fund was a good initiative, and the principle is right, but these services are not being joined up in the way they should. Unfortunately, I have to say that that is all too often not for want of willingness on the part of local authorities of any complexion. The very “silo” and hierarchical nature of how the health service and health economy work means, I am afraid, that there is a considerable lack of willingness to engage on that side of the equation—and it takes two to tango.

[Simon Hoare]

Does my hon. Friend agree that, just as there is a duty to co-operate between local authorities in planning, it would be helpful if there were a duty to co-operate between our social service providers at local government level and clinical commissioning groups? That would be enormously helpful in bridging the gap.

[Robert Neill]

That is an immensely helpful and constructive suggestion. I honestly hope that the Minister will take that idea away and raise it with ministerial colleagues. Unfortunately, our experience is—certainly it was my experience when I was a member of the North East London Strategic Health Authority before I entered this place—that the health economy and health system always look up, towards the Department, and tend not to look out towards the community of which they are part. They do not have the culture of engagement and joint working that local authorities have developed over many years. To achieve that, we need pressure—serious political pressure—from the top that must be listened to. This should be viewed as a further part of the work that needs to be taken forward.

[Jo Churchill (Bury St Edmunds) (Con)]

Does my hon. Friend also agree that part of the whole picture is the ability of local government to help to finance the infrastructure that will allow joined-up working between the health service and local communities? If the two sides cannot talk to each other through the connectivity of their platforms, people cannot be cared for in the way that we need to them to be.

[Robert Neill]

That is absolutely true. The connectivity is important, and the culture is important as well. Many of us have come across very good medical people on CCGs who, given the nature of what they signed up to do, are not keen to be managers and budget-holders, which people in local government are well used to being. In many instances, the local authority is willing to engage, but the CCG, with the best will in the world, does not have as great a capacity in terms of its infrastructure and management systems. Those could easily be hosted by the local authority, and the two bodies could work on a collaborative basis, but because of the silo, bottom-up culture in the health service, the CCG is unwilling to engage. What is needed is a political steer from the Department of Health.

[Norman Lamb]

I totally agree with the hon. Gentleman about the difference between the culture in the NHS and the culture in local government. Does he share my view that we should aim for unified health and care commissioning in a locality, with democratic accountability through the local authority, rather than the ridiculous silo approach that exists at present?

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[Robert Neill]

The right hon. Gentleman is right. He and I both experienced that approach when we were Ministers in the same Government. What he has suggested is precisely the objective that we should work towards, but we need a steer from the top.

Let me make two more brief points. The first is about the fair funding review, which I also welcome, but it will need to be bold and comprehensive. When I was a local government Minister, we had to go through about 275 bits of regression analysis to establish the formula, but we had knocked it down from about 400. Such material is not comprehensible; it is extremely opaque, and it produces consequences that are often difficult to reconcile with what any of us in local government see on the ground.

May I make a plea for one particular factor to be taken into account? I understand that, inevitably, there will be a “needs versus resource” matrix, but thus far it has proved almost impossible to build into the system a proper weighting for historically efficient authorities. A local authority that has historically been efficient and run its services well at low cost receives no credit for that. If anything, such authorities tend to be penalised. Bromley, for example, is a comparatively low council tax authority, the second lowest in outer London, but it is also the lowest in terms of the cost per head—the unit costs—of its service delivery. The system has never taken account of that, and we ought to incentivise it within the system.

[Kevin Hollinrake]

My hon. Friend said earlier that his local authority area contained the highest percentage of the London population. Bromley’s total spending power is £795 a head, whereas Camden’s is £1,171 a head. How can that be right?

[Robert Neill]

The simple truth is that it cannot, although we have broken down some of the artificial barriers. The idea that there is a major distinction between costs in inner and outer London has gone. Many of the outer London boroughs now have much more in common with the inner London boroughs, socially and economically, than used to be the case.

My second point is about the business rates. I welcome what has been said about the review, and especially what has been said about transitional reliefs. I think that the Secretary of State has hit upon the key issue of businesses in high-cost areas such as mine. May I suggest that he considers putting the multiplier on to the consumer prices index rather than the retail prices index? That would be more logical. In the long term, we need to think about how we can capture businesses that do not have a large physical footfall, such as online competitors. We need to deal with the issue of out-of-town supermarkets being treated much more favourably than shops because of the way in which land values come into the equation. When it comes to transitional relief, perhaps we could move from the current sledging to something akin to the sliding scale that we apply to stamp duty land tax.

I hope that those are constructive suggestions that can be implemented in the future.