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7 Jan 2003 : Column 52—continued

Mr. Andrew Turner: The hon. Member for Kingston and Surbiton (Mr. Davey) may not have made himself entirely clear to the Minister, or perhaps the Minister did not entirely understand his point, which related not to the scrutiny of each individual grant, but to the scrutiny of the objective criteria under which the grants will be paid. Far too many grants have been paid, for example, in education without any clear objective criteria. It is notable how many of those grants have gone to Birmingham, whereas none has gone to the Isle of Wight.

Mr. Raynsford: If the hon. Gentleman gave some attention to the details of grants to local authorities, he would be aware of the extraordinary number of very small grants that go, for example, on the beacon council scheme, to which we shall refer later. The average grant is some #40,000. There are well over 100 authorities seeking beacon status next year. Not all will succeed, of course, but to require individual grant approvals in such minute detail is clearly not a sensible way to operate. Obviously, there are broad criteria. When the criteria for beacon council grants are determined, they will specify exactly the sort of broad features in which he is interested. It is right that such issues should be scrutinised, but that does not include the minute detail of individual grant payments.

Sir Paul Beresford (Mole Valley): The Minister will be aware of the Select Committee's concern about the subjectivity in the way in which the general grant was given. Does he agree that local authorities and anyone who is faintly suspicious will see that the new measure is an extension of subjectivity or, in other words, allocation by ministerial will?

Mr. Raynsford: If the hon. Gentleman, who was a Local Government Minister in a former Administration, had read the Local Government Association brief, he would know that it warmly welcomes the provision and believes that it is an appropriate deregulatory measure that allows greater flexibility. Indeed, it states:

I attach rather more attention to the LGA's view than to his.

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Part 4 provides for business improvement districts, which will allow local authorities and businesses to work together to put in place appropriate projects to improve their area. Such projects could deal with a wide variety of issues, including improvements to the quality, safety and accessibility of local shopping centres, enhancements to commercial and business centres and other similar desirable aims. There are already good examples of councils and businesses working together voluntarily to deliver benefits for their areas. That will provide a strong basis for the new bid schemes to develop once the legislation is introduced.

Part 5 contains various measures that will make changes to the non-domestic rating system. For example, small business rate relief will benefit small firms occupying single premises with a rateable value of less than #8,000. That will benefit a significant number of ratepayers. There are almost 1 million properties with rateable values of less than #8,000, and businesses qualifying for the relief will benefit, as their overheads will, in effect, be cut.

Part 6 will update council tax.

Mr. Bill O'Brien (Normanton): On council tax, my right hon. Friend made a statement early in December on the new formula for local authority funding. The proposals are out for consultation and I am sure that he is receiving a substantial number of representations from members of SIGOMA—the special interest group of municipal authorities—and other authorities about the impact of gearing, which will affect the council tax level. As the Bill will be considered in Committee after the date on which the consultation is due to finish, will he address the problems that some authorities are facing in relation to gearing? There is a need to ensure fairness in council taxes under the new formula, so that no local authority faces excessive council tax problems.

Mr. Raynsford: We intend shortly to announce the start of the balance of funding review, which will consider in more detail the wider issues relating to the way in which local authority services are financed. That is the appropriate context in which to consider the issue that my hon. Friend raises. As he referred to the local government finance settlement, however, I should like to point out that we have received a number of representations, including a considerable number from hon. Members and indeed local authorities. Clearly, we are engaged in the process of consultation, so I do not want to say anything more at the moment. I believe that the settlement was a good one. It allowed above-inflation increases to every local authority in the country for the first time, and I believe that that helps local authorities to budget for the coming year.

Part 6 will allow for a 10-year cycle of revaluation and variation in the number of bands. It will help to achieve a fairer way of raising council tax in future years. Contrary to what has been said in some press coverage, revaluation will not lead to increases in the council tax yield. Revaluation is simply the process of looking again at the relative values and distribution between different

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areas. Local authorities will also have greater freedom on the council tax discounts and exemptions that they grant.

Mr. Pickles: The Government already have powers to vary the bands. Why is a new band preferable to variation of bands?

Mr. Raynsford: Although, as the hon. Gentleman rightly says, there is a power to vary bands, he will be aware that no power exists to increase the number of bands. It might well be felt appropriate to increase the number of bands from eight to 10 or more, but that is simply an option. At the moment, the only power available in the legislation is to vary the bands' existing widths within the existing number. We have received representations from certain parts of the north, for example, to the effect that band A covers a disproportionately large number of properties. Some 80 per cent. or more of properties in that area are entirely within band A. The occupiers of a number of very low value properties in areas with very low values feel that band A is perhaps unfair to them because it covers a very wide range, including properties that may be twice the value of their own. We have not taken decisions on these issues, but they need to be looked at, and given that we have received these sensible and logical representations, it is right that we make provision—if necessary, and if it is felt appropriate—to increase the number of bands.

Mrs. Browning: Does the Minister therefore have in mind park homes, which inevitably fall into band A, even though their owners often feel that that band is unfair so far as they are concerned?

Mr. Raynsford: The hon. Lady raises a perfectly fair point. I myself have received representations from the owners of park homes whose properties fall into this category, and who feel that band A is very broad. In some cases, their homes fall rather low in the overall position in band A, and a separate band might be helpful to them. This is precisely why we are giving ourselves the power, if we decide that it is appropriate to do so, to create additional bands. However, we are not committed to doing that at this stage, because a lot will depend on the revaluation process, which, as I have said, will begin in 2005.

Sir Paul Beresford: On a constructive note, when the banding system was set up in 1991, the variation between property values in the north and in the south, for example, was not as great as it is now. Is the Minister considering establishing a regional mean variation, so that variations in the same banding system can accommodate variations in property values throughout the country?

Mr. Raynsford: The hon. Gentleman will be aware that some representations have been made in favour of such an option, but as I have already made clear, we have taken no decisions and have no predisposition one way or the other on this issue. We will begin the process of revaluation with a genuinely open mind, and we will be guided by the evidence. Between now and 2005, when revaluation begins, a lot could happen in terms of

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relative values. For example, at the moment a great deal of concern exists in the south of England because in the past 11 years values there have increased by a greater proportion than in the north. However, current figures tell us that the fastest growing region in terms of house prices is Yorkshire and Humberside, and if that trend were to continue for a couple of years, we could well see a very different pattern from the one that currently prevails. For all those reasons, it would not be wise for us to jump to conclusions at this stage about what is the right way to handle this issue, as and when the revaluation begins. However, we have made provision, and the powers exist to deal with this issue in a sensitive way.

Through part 7, we are aiming to complete the transition to resource accounting in the housing revenue account, thereby making it a pure landlord account. Local housing strategies will be put on a statutory basis, and authorities will have the flexibility to rationalise their housing plans. Perceived barriers to rent restructuring will be removed. Finally, part 8 contains the non-finance provisions in the Bill, which also give substantial freedoms to local authorities. For example, all best value authorities will be allowed to charge for discretionary services. Better performing councils will also be empowered to trade across a range of services that they provide.

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