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Justine Greening: I am trying to respond to the Minister. We have some real concerns about business rates and we are worried that if Ministers go ahead with the revaluation they have planned it will destabilise one of the key revenues for councils-
Mr. Denham: Can the hon. Lady be clear that she is suggesting, as she did in questions last week, that the revaluation should not go ahead, knowing as she does that 60 per cent. of businesses would see an average of a £770 rate increase from April?
Justine Greening: The Secretary of State fails to recognise that the decrease for those companies is funded by increases for other companies. If the Government had looked at the impact assessment of whether those companies could afford the increase, he would be on stronger ground. The reality is that those getting the biggest rises far outweigh the number getting the biggest decreases. In eight out of nine English regions, more companies will see a 20 per cent.-plus rise than will see a 20 per cent. fall. The Secretary of State cannot claim that the Government are pursuing a strong policy when they have not even bothered to look at how the 40 per cent. of companies that face a rise will manage to pay it. If the Government's calculations are wrong-not that they particularly have any-business rate income could be destabilised.
It would be better to allow all companies to enjoy the minor reduction that they would all get from the inflationary decrease that would have resulted from the multiplier, had the revaluation not gone ahead. Instead of playing party politics, the Secretary of State should get out to the regions that will see the biggest losers and talk to companies about how they will afford to pay. Those increases alone could stifle the recovery before it gets going.
Dr. Iddon: In Bolton, the regional development agency has been very helpful to local companies. This evening, MPs from the north-west have been invited to a meeting of the Northwest Development Agency. What can I tell the agency about the likelihood that it will still exist in the unlikely event that the hon. Lady's party wins power on 6 May?
Justine Greening: We have said that it will be up to local authorities and local regions to decide whether their regional development agency has been effective. In some parts of the country, the feedback is that the agency has been effective, but in others it has not. It should be down to local areas to decide how they want to organise regeneration.
Hazel Blears: The hon. Lady's party has said that it would fund the council tax freeze partly by abolishing unelected regional tiers of government, so she has to be straightforward and honest. Will she fund the council tax freeze by abolishing excellent bodies such as the Northwest Development Agency? Again, we have a right to know.
The right hon. Lady has completely misunderstood the funding for the council tax freeze. She has even, within 10 minutes, contradicted the Secretary
of State when he said that, apparently, he thinks that there is not enough in our advertising budget for our policy, which of course there is.
The settlement is part of a broader failure by the Government to work with local authorities. Under the Government, they have faced extra burdens, not just from top-down diktat, but because they have been able to spend less of their money as they would have wanted. That is one of the reasons for the pressures on council tax. In 1996-97, 22 per cent. of local government revenue expenditure was financed through council tax, but by 2006-07, that had risen to 26 per cent.
Justine Greening: Councils are under so much pressure that they are being pressed to go out to their local communities and fund services by raising council tax. Local authorities now have a raft of extra measures to deliver that have never been properly funded. In fact, there is a live one here in London on concessionary bus fares- [Laughter.] I am sure that many Labour Members find that entertaining- [Laughter.]
Mr. Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): On a point of order, Madam Deputy Speaker. The hon. Member for Croydon, Central (Mr. Pelling) was on the Conservative Benches a little while ago-as a result he increased the number of Conservative Back Benchers by 50 per cent.-but he is now on the Labour Benches. I think that he ought to be heard at some point. I do not know where he is going to go next.
I am sure that the hon. Lady simply could not see or hear me-that is why I came across to the Labour Benches. I am grateful to her for giving way. May I compliment her on dealing with the shells that have been dropped by some of the heavyweights who have decided to take part in this debate and have a go at her? May I ask her two questions about the points that she has raised? She mentioned the heavy burden of local government taxation, and it is welcome that any incoming Conservative Government would freeze the tax. Does she feel that perhaps the council tax has come
to the end of its ability to take additional taxation increases? Given that she is a Member of Parliament for a south London constituency, does she sympathise with some businesses that feel that it is a little unfair that the supplementary business rate that they are paying goes into Crossrail? There might be important things to do in south London communities using some of that supplementary business rate.
Justine Greening: The hon. Gentleman raises some interesting points. The first was about council tax and the pressures to increase it further. It should be up to local residents to decide whether council tax rises are affordable. That is one of the reasons why Conservative Members have talked about providing the ability for local residents to hold a referendum if they believe that council tax rises are unaffordable.
The hon. Gentleman also raised a point about Crossrail and supplementary business rates. The Government recently brought through the Business Rate Supplements Act 2009, about which we expressed the concern, when it passed through the House, that it could lead to extra burdens on companies. So I share his concerns about the concept of supplementary business rates-in fact, we have said that we want councils to be able to go in a different direction. We want to give them the power to levy a business rate discount, rather than a supplement. We need to give councils the ability locally to help regenerate their local economies, and I will come later to some of the incentives that we would like to see.
As I am sure the hon. Gentleman recognises from his own local council in Croydon, councils currently spend far too much time micro-managing Government initiatives and not enough time being able to tailor what they are doing locally to local community priorities. In fact, 36 out of 52 revenue grants for local authorities are ring-fenced, so it is simply not correct to say that local authorities are being given the freedom that they need to deliver for their local communities as well as they can. We would very much like the Government to move away from ring-fencing grants and towards giving councils more freedom to deliver on local priorities as they see fit.
Only today we heard the Prime Minister talking a good game, but the reality for local councils is that they do not see that change happening on the ground. As I mentioned to the hon. Gentleman, there is very little incentive in the funding formula for councils to deliver for their local authorities. Total Place has started to provide some of the fact base, as it were, for councils to be able to do so, but we should not kid ourselves. We are at the beginning of a long road towards councils being able to get out there and not just work with other local providers, such as the NHS and the police, and with the Department for Work and Pensions, but, more broadly, deliver value for money for their residents.
Mr. Bailey: I have listened with interest to the hon. Lady's arguments. In the absence of ring-fencing, could she tell me whether a potential Conservative Government would allow local authorities to raise their council tax to any level, without any action being taken?
I have just said what we would hope to do on council tax. We want to give local communities the ability to set the cap. That should not be done in Whitehall. If local communities decide that a proposed
rise is unaffordable, they should be able to stop it. I understand the hon. Gentleman's point, but it shows the difference between our approach, which is to trust local communities and local authorities to get on with running their own lives, and that of the Government, who take a top-down approach the whole time.
The issue is not just about giving local people more authority to hold their local councils to account on council tax rises. We also need to put in place incentives, so that local authorities can benefit when they take good decisions on providing more homes for local people. Many local councils across England and Wales would say that they are concerned at the lack of house building that has taken place, but they have had to work within a framework of top-down targets that local communities have rejected.
Mr. Slaughter: It is wonderful to hear an Opposition Front-Bench spokesperson, however sincerely or not, talking about house building. Will the hon. Lady take this opportunity to condemn Hammersmith and Fulham council, which is planning to demolish 3,500 good-quality council homes?
Justine Greening: Thank you very much, Madam Deputy Speaker. I was making the point that part of the funding settlement that we are talking about should reward local councils when they develop their local communities by providing new homes. We would also like local councils to have incentives, so that they are rewarded for doing a good job in developing their local economies and generating local jobs. That is why we have talked about allowing them to keep the gain from business rates that they make when they do a good job of bringing new companies and new industry into their local areas.
Finally, it is time to say that local authorities with local responsibilities need to be more accountable. Authorities such as Windsor are already being far more transparent, as is the Mayor of London, putting all spend over £1,000 out for public scrutiny. We would like other councils to follow that measure. Indeed, I am sure that when the Minister wraps up, she will say that she, too, would like that-I am guessing that she would not want to go against increased transparency. We certainly want local councils to have increased transparency for their residents, because it is the best way to create an environment in which councils can not only have more power to deliver on local priorities, but be better held accountable by their local residents in doing so.
Mr. David Chaytor (Bury, North) (Lab):
In view of the hon. Lady's comments about transparency and accountability, can she give an absolute assurance that
this Friday Opposition Front Benchers will support my private Member's Bill, the Local Authorities (Overview and Scrutiny) Bill?
Justine Greening: We are very supportive of moves to ensure that transparency is developed and improved in councils. We think that that is the best way to enable local residents to hold their local authorities to account.
In place of the local government finance settlement approach that we heard about from the Secretary of State, we want local communities and local authorities to be given more power to deliver their priorities on the ground. We want local residents to be able to cap their council tax if they think that that is their priority, rather than having Ministers do it whether it is or not. In the earlier debate, which you were here for, Madam Deputy Speaker, a variety of hon. Members complained about the fact that their police authorities had been capped, as local people were perfectly happy to pay more-their priority was to see more police on their streets. We think that that is the right way to go: to give local people the choice, rather than have it taken away.
Whatever the Prime Minister says this week, councils have nothing new to look forward to from the Secretary of State or from the Minister. It is more of the same when we look through this local government finance settlement. There is continued top-down ring-fencing of money that should be spent on residents' priorities, rather than Whitehall priorities. There is a continued lack of incentives for councils to develop their local communities and economies. There is continued pressure on council tax to rise, when family finances are stretched to the limit, because councils are asked to take up, on behalf of Whitehall, so many unfunded initiatives. There is continued micro-management and inspection from above, which costs money that could otherwise go into front-line services.
The bottom line is that we need to give councils the freedom that they crave to deliver better services and better value, and to deliver on the priorities that matter most to their local communities. However, as we have heard today, for that to happen, we will need a change of Government-it will not happen under this one.
Dr. Phyllis Starkey (Milton Keynes, South-West) (Lab):
I want to make a few observations and I will try to be brief because I know that many hon. Friends wish to speak. Like other hon. Members, before I was a Member of Parliament, I was the Labour leader of a council under a Conservative Government. I can attest that the experience under this Government, with their attitude to local government, although there are some things that I criticise them for, is light years away from the experience of council leaders under the previous Conservative regime. It attempted to set the budget of every council in this country, a Stalinist exercise that has never been exceeded and that, I hope, will never be emulated by any Government, and that is not to mention the gerrymandering of the grant system. That needs to be said. I know I am of an age that means that I perhaps have a longer memory than the hon. Member for Putney (Justine Greening), but take it from me: this Government are in a completely different, and much better league, as regards local government and the attitude of central Government to local government. Indeed I commend
the steps that the Secretary of State has taken to move the balance further towards local government, although he still has a long way to go.
I want to make a number of remarks following the hon. Lady's speech. The way in which her hon. Friends-apart from the hon. Member for Mole Valley (Sir Paul Beresford), my fellow member of the Select Committee on Communities and Local Government-deserted the Chamber and left her in an acre of empty Green Benches is distressing. I guess that they have done that because, like me, they were somewhat distressed by the innumeracy that she demonstrated, and her lack of understanding of local government finance. That is incredibly distressing in someone who wishes to become one of the Ministers in charge of it.
First, we are not talking about the national non-domestic rate, which is not relevant, but about the system of local government finance as it relates to the council tax. The hon. Lady must know that revaluation, unless each individual council chooses to use it as an excuse for increasing the total council tax take in their area, does not mean that everybody's bill goes up; it means that some people's bills go up and some people's go down. It is absolutely indefensible for her to continue in this way: either she does not understand it, or she is continuing to state something that she knows is not accurate.
Dr. Starkey: The hon. Lady should look at the data she cites. The Welsh Assembly-I believe it was my party, but I am not making an excuse for it-took advantage of the revaluation hugely to increase the total take. The bills went up, because it decided to increase the amount of money raised. I am distressed to have to explain this to the hon. Lady, but that is how the system works. As a former chair of finance, I know the way the system works. A council decides how much money it needs to raise from council tax in order to fill the gap between grant income, charge income and what it takes from the reserves. It decides on the total amount it wishes to raise and then it turns to the city treasurer and says, "Looking at our local tax base, given the people we have in each band and so on, how much do we have to increase band D council tax to raise the requisite amount of money?" It follows that if there is a revaluation, unless the council decides it wants to increase the amount raised, some people's bills will go up and others' will go down. The Welsh Assembly example, cited all the time by Conservative Members, is not an example of revaluation leading to bills going up; it is an example of an elected council or assembly choosing to increase the total take and, of course, everybody's bills going up. It has nothing to do with revaluation.
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