Local Government Finance Bill

Tristram Hunt Excerpts

Tuesday 10th January 2012 Commons Chamber

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

It is a great pleasure to follow the hon. Member for Milton Keynes South (Iain Stewart).

I am instinctively in favour of some of the reforms that we are discussing. Undoing the damage which the previous Tory Government did to local authorities always seems to me a good idea. It would have been nice to hear a slightly longer and deeper apology about John Major’s decision to nationalise the business rates, but we cannot have everything.

The reason why I am instinctively in favour of the thinking behind the Bill is that the past 100 years have witnessed, as the hon. Member for Ipswich (Ben Gummer) suggested, a relentless emasculation of local government power and autonomy. As this place has found less and less to do with questions of war, empire and global affairs, it has concentrated on and interfered relentlessly with the powers of local government, most of all in the field of local government financing.

Perhaps you will allow a little history, Mr Deputy Speaker. The great age of local government—of municipal socialism, of gas and water socialism—was the period 1870 to 1914. This was when our great urban centres were civilised: Birmingham, Glasgow, Manchester, Stoke-on-Trent and even London under the London county council. This was the age of museums and parks, town halls and swimming pools, schools and hospitals. There was a widespread belief in the virtue of local government and its capacity to deliver real change for the life chances of the poorest in Britain. The London county councillor and dockers leader John Burns described “a revived municipal ideal”, the goal of which was

“to do for all what private enterprise does for a few. It is the conscious ordering of the city, through ownership of public services, of its own comfort, happiness, and destiny”—

in fact, pretty much everything that this Government are opposed to.

But of course this cost money. There was extensive borrowing by local authorities—I welcome provisions to allow for extra borrowing by local authorities—and there was expenditure. In 1905, local authorities accounted for more than 50% of total Government expenditure, a figure which has come down to around 18% today, a clear indication of the decline of local authority power. We are all guilty in that process—inter-war demands for national efficiency, post-war demands for centralisation, demands for rationalisation in the 1970s, and privatisations in the 1980s.

At the heart of this story is finance. The capacity of local authorities to raise funds and be responsible for their allocation has been crippled. Today far too many local authorities seem overly dependent on car parking charges, for example, rather than any other income stream. This is in stark contrast to the situation in America and on the European continent. The lack of a plural funding base has undermined our councils’ ability to deliver for local communities, and made them overly dependent on the decisions of Whitehall, rather than town hall. So councils need the power which comes from financial autonomy, all of which makes the Bill so disappointing.

On the issue of liberty and equity, on the freedom of councils to act, as set against the broader need for social justice across the country, the Secretary of State’s Bill fails. The Government’s system of tariffs and top-ups will see a wholly unacceptable loss of income for those local authorities with less business rate income than their peers. This is, Mr Deputy Speaker, as you will know, a north-south issue. We have spoken of Knowsley v. Basingstoke, of Bexley v. Barnsley. On the Government’s plans—for all their talk of recouping disproportionate incomes—there will be a massive boon for high-performing cities in the south-east and marked loss of incomes for struggling cities in the north.

What is more, the reset mechanism and support funds do not properly account for the loss of a major employer—a dock, for example—and as we have heard, there are perverse incentives in the business rate model that encourage services over manufacturing when we are meant to be rebalancing the British economy, and large square-footage over intensive employment.

It is even unclear from the Government’s own ambitions how these plans will stimulate growth when the Treasury top-slice takes away the incentive. It is uncertain, it is unpredictable and it is fiendishly complex. This will not benefit Stoke-on-Trent, which we all want to see benefit from Government legislation. In fact, it will be hard hit in the ensuing years, which is why I urge Ministers to think again about the Bill. We believe in some of its propositions, but I will be voting against it.