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Clause 1

Local retention of non-domestic rates

Amendment made: 15, page 2, line 4, at end insert—


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(d) paragraph 28 (regulations about distribution of remaining balance).’.—(Robert Neill.)

Clause 3

Additional grant

Amendment made: 16, page 2, line 30, leave out from ‘(7),’ to end of line and insert ‘omit “and 86”.’.—(Robert Neill.)

Schedule 1

Local retention of non-domestic rates

Amendments made: 17, page 11, line 35, at end insert—

‘(5) The reference in sub-paragraph (3) to use for the purposes of local government in England includes the making of payments under an Act or an instrument made under an Act (whenever passed or made) to—

(a) billing authorities in England,

(b) precepting authorities in England,

(c) levying bodies in England (and for this purpose “levying body” has the meaning given by section 74(1)), or

(d) bodies to which section 75(1) applies.’.

Amendment 18, page 20, leave out lines 31 to 33.

Amendment 19, page 21, line 14, at end insert—

‘(1A) If a local government finance report for a year has been approved by resolution of the House of Commons, and that report provides for an amount to be credited to the levy account kept for the year, that amount may be credited (as an item of account) to that account.’.

Amendment 20, page 25, line 41, leave out ‘this paragraph has effect’ and insert—

‘the levy account is kept’.

Amendment 21, page 25, line 42, at end insert—

‘in accordance with subsections (2) to (4).’.

Amendment 22, page 26, line 3, at end insert—

‘, and

(c) all of the calculations required by regulations under paragraph 26 (calculations of safety net payments on account) have been made for the year.’.

Amendment 23, page 26, line 13, at end insert—

‘Step 2A

Add to the amount found under steps 1 and 2 any amount credited to the levy account for the year in accordance with paragraph 18(1A) (credit in accordance with local government finance report).’.

Amendment 24, page 26, line 15, leave out ‘and 2’ and insert ‘to 2A’.

Amendment 25, page 26, leave out lines 19 to 21 and insert—

‘Subtract from the amount found under steps 1 to 3 the aggregate of all the payments to be made by the Secretary of State under regulations under paragraph 26(4)(b) (adjustments following safety net payment on account).

Step 5

Add to the amount found under steps 1 to 4 the aggregate of all the payments to be made to the Secretary of State under regulations under paragraph 26(4)(b).

Step 6

Subtract from the amount found under steps 1 to 5 the aggregate of all the payments on account to be made in the year under regulations under paragraph 26.’.

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Amendment 26, page 26, line 22, leave out ‘4’ and insert ‘6’.

Amendment 27, page 26, line 24, at end insert—

‘(5) Sub-paragraph (6) applies if, in the first year for which the levy account is kept—

(a) an amount is credited to the levy account for the year in accordance with paragraph 18(1A), and

(b) that amount exceeds the aggregate of all the payments on account to be made in the year under regulations under paragraph 26.

(6) The amount of the excess is to be treated as the remaining balance on the levy account for the year.’.

Amendment 28, page 26, leave out lines 30 to 41 and insert—

‘(2) The Secretary of State may by regulations make provision about the basis (“the basis of distribution”) on which an amount referred to in sub-paragraph (1) is to be distributed.’.

Amendment 29, page 26, line 42, leave out from ‘If’ to ‘, the’ in line 43 and insert—

‘the Secretary of State makes a determination under sub-paragraph (1)’.

Amendment 30, page 26, line 45, leave out ‘sub-paragraph (1)’ and insert ‘that sub-paragraph’.

Amendment 31, page 27, line 1, leave out ‘report is approved’ and insert ‘determination is made’.

Amendment 32, page 27, line 4, leave out ‘report’ and insert ‘regulations’.

Amendment 33, page 27, line 19, at end insert—

‘; but any such time must fall within the year to which the remaining balance relates.’.

Amendment 34, page 29, line 42, at end insert—

‘, unless sub-paragraph (5A) applies.

‘(5A) A revocation made after the Secretary of State has given that notification has effect for the year for which the notification was given if—

(a) it is made in response to a request under sub-paragraph (3)(b) made within the period of 28 days beginning with the date on which the notification was given, and

(b) it is made before the local government finance report for that year is laid before the House of Commons.’.

Amendment 35, page 29, line 43, leave out ‘or revoking a designation’ and insert—

‘a designation, or revoking a designation otherwise than in response to a request under sub-paragraph (3)(b)’.

Amendment 36, page 30, line 4, after ‘persons’ insert ‘(if any)’.

Amendment 37, page 30, line 8, at end insert—

‘, unless sub-paragraph (9) applies.

‘(9) A notification under sub-paragraph (7) of a revocation made in the circumstances described in sub-paragraph (5A) must be given as soon as is reasonably practicable after it is made.’.

Amendment 38, page 31, leave out lines 36 to 38 and insert—

‘(6) Regulations under paragraph 28 may provide for a pool of authorities to be treated as a relevant authority for the purposes of the regulations.’.

Amendment 39, page 31, line 40, leave out from ‘23’ to ‘from’ in line 42 and insert ‘, 26 or 28’.

Amendment 40, page 31, line 45, leave out ‘or 24’ and insert ‘, 24 or 28(4)’.

Amendment 41, page 31, line 46, leave out from ‘regulations’ to end of line 2 on page 32.—(Robert Neill.)

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New Clause 8

Payments to and from authorities

‘(1) Section 141 of the LGFA 1988 (power to make regulations about set off of payments to and from receiving authorities) is amended as follows.

(2) In subsection (5)(b) (power to require provisions of the Act to be read subject to regulations), after “79(2)” insert “, 84H(2) and 86B(2)”.

(3) In subsection (7) (payments to receiving authorities to which regulations may apply)—

(a) after “84C” insert “, 84K, 84N and 86B”, and

(b) for the words from “paragraphs 12 and 15 of that Schedule” to the end substitute “and paragraphs 12 and 15 of that Schedule.”

(4) In subsection (8) (payments from receiving authorities to which regulations may apply), for “and 84C” substitute “, 84C, 84K and 84N”.

(5) The amendments made by this section have effect in relation to the financial year beginning with 1 April 2013 and subsequent financial years.’.—(Robert Neill.)

Brought up, and added to the Bill.

Clause 16

Extent and short title

Amendment made: 61, page 9, line 14, at end insert

‘, subject to subsection (1A).

(1A) Sections (Power for HMRC to supply information for purposes of council tax) and 14 extend also to Scotland.’.—(Robert Neill.)

Third Reading

Queen’s consent signified.

9.14 pm

Robert Neill: I beg to move, That the Bill be now read the Third time.

This is a bit like coming out in the play-off final after the brief half-time break at Wembley on Saturday. We just need a little bit more to close the deal as far as this Bill is concerned—[ Interruption. ] It did not have to go to penalties.

We have had a lengthy and sometimes constructive debate during the Bill’s progress through the House, and it is worth taking stock now. The House has the opportunity to make a considerable game shift in the relationship between central and local government. We are now in a position to move away from what has been, on any independent view—as consistently endorsed by independent experts, going back to Layfield, the Lyons inquiry and the resource review—the unhealthy level of dependence of local government on central Government for income that has accrued over the years. As part of the Government’s localism agenda, we intend to hand back power to local people and the authorities that represent them. I hope that that principle will be recognised by hon. Members on both sides of the House.

I shall set out what the Bill does and its wider context as part of the coalition’s localism agenda. It is recognised that giving greater local control over expenditure and revenue raising is desirable. The principle of business rates retention is therefore supported across the House. Once we drill under some of the rhetoric, there is also a general recognition that welfare spending needs to be brought under control, and that it is right that local authorities should have control over council tax support.

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The Bill incentivises local authorities to go for growth, because that is the other part of the agenda that the coalition regards as critical. We need to encourage sustainable growth and the Bill incentivises local authorities to grow their tax base by directly linking financial benefit to the decisions that they take on, for example, planning permissions that lead to more commercial floor space and economic activity, and in the design of their council tax support schemes that incentivise them to get claimants back into work, which is where we all want to see them wherever possible. It enables councils to decide how best to manage their contribution to reducing the deficit. All thoughtful commentators accept that a contribution must be made and that it is more likely to be nuanced and effectively delivered if there is local input into the design of that contribution.

Local authorities will also be given the freedom to decide how to help provide for the most vulnerable in their communities. I hope that no one seriously thinks that any party has a monopoly on concern for vulnerable people in their communities. The Government regard the vulnerable as a top priority, and that is why we have increased the weighting given to the needs element of the formula grant in our financial settlements; why we have maintained that in the baseline; why we introduced transition grants; and why we will ensure that local authorities that deal with some of those areas of greatest cost pressure in relation to adult social care and children’s care will be designated as top-up authorities and will have a degree of certainty about their funding by index-linking and protection from volatility. That is a practical commitment to helping to protect the most vulnerable in society.

The reforms are also part of our wider approach to supporting growth, which is our best hope of having the money that we need to support services for the vulnerable in a sustainable way; to get more people back into work; and to enable us to pay down the deficit, which at the moment ties the hands of central Government in seeking to deliver the services that we all want for our communities. We have made real progress on this front over the past two years. The Bill sets important incentives for business rate retention and helping people back into work through council tax support, but that is linked to other parts of the agenda. We are encouraging local authorities to build new homes, through the new homes bonus, an incentive for both commercial activity and domestic building. Homes as well as jobs are central to the incentives we are putting in place.

The local enterprise partnerships are bringing together businesses and civic leaders to provide strong local leadership and to drive growth. My right hon. Friend the Secretary of State, I and all the Ministers involved in the legislation very much hope that the Bill will not only make technical changes but bring about an attitude change in the relationship between local government and their business communities. Many of our competitors have a much closer relationship between their local authorities and the big economic drivers, but that has not always been incentivised in the UK. The Bill will enable it to happen and—I hope—help that mindset to develop. The LEPs will play a part in that by setting up the structure to enable it to happen.

We have put in place 24 enterprise zones offering discounted business rates and simplified planning to attract new local business and investment. The regional

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growth fund, the Growing Places fund and the Get Britain Building fund are providing a £3.3 billion boost to local economies and supporting tens of thousands of jobs, and through our welfare reforms we are seeking to bring welfare spending back under control and to target support. The 2010 spending review focused on reducing welfare costs through savings of about £7 billion a year.

Localising council tax support will help to deliver savings of £500 million across Great Britain—this in an area of activity where expenditure more than doubled under the Labour Government. It is not a sign of a healthy economy that expenditure on council tax benefit should have doubled between 1997 and 2009-10. Instead, we are providing strong incentives for local authorities to support growth and improve employment opportunities, helping to reduce poverty and reliance on support, as well as hold down costs in the long term. Speaking as someone whose grandfather clawed his way out of poverty in the east end, I, like plenty of other Government Members, have as much personal experience of such things as anyone else who has spoken.

The Bill has received extensive scrutiny. Its core principles were set out in the coalition agenda; we then proceeded with the local government resource review in early 2011; there was a consultation, along with eight detailed, technical papers to explain the thinking behind the reforms; and we have discussed the detail of the scheme through our local government finance working group and several sub-working groups. We have by no means ignored the views of local authorities; on the contrary, we have sought to engage with them, and will continue to do so, at every stage in the process. Those groups have been meeting frequently since January.

Localising council tax is a pragmatic approach to balancing the need for reform with ensuring a sensible level of deficit reduction, and builds on the welfare reform White Paper, published in autumn 2010, setting out our broad intentions. We undertook pre-consultation engagement with local authorities and other groups to help them to understand the issues, and held delivery partner engagement events last August and September, as well as a full three-month consultation from August to October that generated about 400 responses.

Against that background of consultation, nobody can say that the Government have not sought to engage with people over our reforms. Against that background of consultation and information sharing, last Thursday we published a series of statements of intent to provide clarity and assurance to the House and councils about how the reforms, including our proposal to fund localised support for council tax, will work in practice.

I shall tell the House what we have published so far and how much we have sought to set out the agenda. We have announced that business rates will be split 50:50 between central and local government and confirmed that central Government will return their share of business rates, in its entirety, to local government, and we have confirmed that the system will not be reset until 2020 at the earliest to give sufficient reward and long-term certainty while ensuring that the scheme will be fiscally sustainable, thus protecting the interests of taxpayers and the wider economy.

Our economic analysis, which has been independently verified, suggests that a 50% local share over a seven-year reset could create an additional £10 billion of gross domestic product. That figure is based on the multiplication

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of additional commercial floor space created through our incentive effect and, then, the additional gross GDP that stems from the economic activity in that commercial floor space.

We have set out the statements of intent indicating what will be in the secondary legislation, including—as was noted in the previous debate—the safety net threshold, to be set at between 7.5% and 10%, to protect against volatility.

On the localisation of council tax support, we have been clear that we will seek to provide as much detail as possible as early as possible. We continue to work with local authorities and service providers on the design of the scheme. [ Laughter. ] I know that the right hon. Member for Greenwich and Woolwich (Mr Raynsford) does not believe that any proposal that he did not make could be taken seriously, but that perhaps says rather more about him than about the Government.

Mr Raynsford: Perhaps the Minister will now tell the House how he believes that publishing everything that is required to enable early implementation as soon as possible is compatible or consistent with the current situation, where, eight months before local authorities have to finalise the scheme, they do not yet know what the legal requirements are.

Robert Neill: If the right hon. Gentleman deigns to read the statements of intent, he will find what is effectively an executive summary of the regulations, which will deal with how the default scheme operates, including for pensioners, who we have indicated should be protected. We are having regular meetings with our local government working group, which includes representatives of local authority treasurers, and we are also in regular contact with the principal software provider and other service providers. We are therefore doing exactly what the right hon. Gentleman would want us to do, although I doubt whether it will satisfy him, because it is not him doing it.

We have announced £30 million of initial funding to help meet the costs of planning and analysing draft schemes for both billing and precepting authorities, so we are supporting local authorities. The statements of intent are, in fact, very detailed. We have also provided a free online calculator to help local authorities to analyse the potential impacts of their proposed schemes.

Helen Jones: Wow!

Robert Neill: I notice that the hon. Lady is in what some might uncharitably term “sneering mode” this evening. I think that says something about the attitude of Labour Members towards a reform that they know needs to be undertaken, but which they never had the courage to undertake, which rather undermines their argument.

We have also taken steps in the Bill to make things easier for local authorities—for example, by clarifying that billing authorities can consult with precepting authorities, produce a draft scheme and consult more widely, all before the Bill receives Royal Assent. It is a fair point to say that the time frame is challenging, but doing those sensible things in parallel makes the scheme

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perfectly capable of being delivered. That is an important practical step that we have taken. We are determined to put local authorities into the best possible position to develop and consult on their local schemes. I stress that local authorities have real choices about how they develop their schemes for working-age council tax payers, what protection they choose to offer and how they choose to fund that protection.

The reality is that, under the circumstances, “one size fits all” will not work. Different areas face different challenges, and they have to make different choices. That is localism. I hope the Opposition will reflect on the fact that if they talk about being in favour of localism, it ill behoves them to seek to obstruct a Bill that, together with the Localism Act 2011, presents local authorities with the most significant practical step towards localism that we have seen in many a long day. I hope that, rather than repeating the mantra that we have heard so far—a mantra on, frankly, rather narrow ideological grounds—the Opposition will use their influence with their representatives in local government to step up to the plate, help to design the schemes that we all need to have in place and drive forward what is a real opportunity for local government in the years ahead. I commend the Bill to the House.

9.29 pm

Hilary Benn: I know that the Minister is an enthusiast, but those watching could be forgiven for thinking that the Bill was the answer to all the nation’s ills—at one count it was, with one thing and another, solving poverty and dealing with the deficit. Also, although I have a high regard for the Secretary of State, I am surprised that he did not make that speech, because after all, this is his flagship Bill. I know that we have a part-time Chancellor; I just hope that it is not proving contagious in the Cabinet. [ Interruption. ] I say that genuinely, as it would have been nice to hear from the Secretary of State, who has spoken only once on the Bill—on Second Reading. The House will recall that he claimed great things for the Bill, no doubt because the coalition agreement promised

“a radical devolution of power and greater financial autonomy to local government”.

The truth is, however, that as the Bill has progressed, it has failed to live up to that promise. I shall respond directly to the Minister’s point here.

As we were reminded earlier today, it pays to try to get these things right. I say that because, with one exception, those sitting on the Government Front Bench have form. People remember that the last time wonderful words were said about a reform of local government finance, it was called the poll tax and the consequences included riots on the streets. The people would not have it and the Prime Minister lost her job. The Secretary of State argued that the current system gives central Government too much power and that he wanted to change that. We would take him at face value if that is what the Bill did, but it does not.

What the Bill does and what the Secretary of State has created is a system that gives all the power to himself—the power to determine the central top-slice; the power to set the baseline; and the power to decide the extent of the tariff for the top-up and when the safety-net should kick in. It is a whole list of powers. If

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this really is localism—the argument that the Minister tried to advance—why are there all these central powers? It does not sound much like localisation to me, and it does not feel much like that to local government.

That matters because when local authorities look at the way in which this Government have chosen to exercise the powers they already have, particularly in relation to spending, they have found, as we know, a pattern of cuts that is utterly unfair and the very opposite of “We are all in this together”. It also matters because, as the Minister will know, although he did not refer to it, one of the real concerns about the Bill that we have heard from colleagues in local government is that it will end up accentuating the gap between more prosperous and less well-off local authorities. That is a real concern. The Government’s only reply has been to say, “Don’t worry about it, because at least you will not be worse off in year one.”

That is why the arrangements surrounding the safety net are so important. As the House knows, some authorities are very heavily dependent on the business rate income they get from a particular factory or a big employer. At the moment, it does not matter because it all goes into the central pot and is then divided and comes back, but under this Bill, it really will matter, and the consequences of losing that income—if the business were to close or relocate elsewhere, for instance—would be devastating. In those circumstances, what those local authorities want to know is whether the Government will be there to help. What we find when we look at the papers published last Thursday is that the safety net will kick in only when authorities meet a threshold for the decline in their business rate income, and we are advised that the threshold will be set between 7.5% and 10%. That is hardly reassuring, because it means that local authorities could lose a lot of money under this Bill before help arrives. To put it another way, councils are going to have to fall quite a long way before they hit the net.

The Bill was also supposed to be about trying to get rid of a complex system for funding local government—we heard the argument a few moments ago. Frankly, however, all the Bill does is to replace one version of complexity with, in the words of London Councils, another “fiendishly complex system”. If anything, on the basis of the documents produced last week, the Bill has grown even more complex during its passage through the House.

As for enabling local authorities to receive the benefits of business rate income and its growth, what do we discover? We discover that the Government like the idea of business rate income growth so much that they are going to take half of it for themselves. That is what was announced last week. It is no wonder that the Local Government Association has described this as a “tax on local authorities”, which it strongly opposes. What is more, the Government seem to intend that set-aside will continue beyond 2015. Why? Because they want to be able to continue to impose cuts on local government after the end of the current spending review period. Having heard the Minister’s argument that this was the be-all and end-all of localism, the Local Government Association said that it was

“not a localising policy and goes against the Government's stated commitment to localism.”

That deals with the first part of the Bill. What about council tax benefit? Rank inconsistency is plain for all to see. Only a few weeks ago, the Secretary of State was

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touring the country denouncing those who were planning a modest increase in council tax, including a number of Tory-controlled authorities. He said that he was

“determined to protect hard-working families”,

but here we have a Bill that will end up doing exactly what he was denouncing. We have legislation that will, from next year, impose council tax increases on many unsuspecting people. And whom has the Secretary of State chosen as his target for those higher council tax bills? In keeping with the Government’s philosophy, he has chosen people on low incomes—people who do not have a lot of money—because that is why they get council tax benefit in the first place; and on that, he is strangely silent.

As if to flaunt just how out of touch they are, the Government had the nerve to say, in one of the documents published last week, that the aims of the council tax benefit cut included “reducing poverty”. This is a strange way of going about it. The Government are saying to people with not a lot of money, “You know what? We are going to cut your income to make you work harder”, which is the precise opposite of the policy that they have pursued when it comes to millionaires and the tax cut that was announced in the Budget. They also claim that they do not want to affect work incentives, but, as my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, that is nonsense.

I pay tribute to my hon. Friend the Member for Warrington North (Helen Jones) for the forensic analysis to which she has subjected the Bill during its passage through this House. I am sure that her cogent arguments will be considered very carefully by those in the other place. I also pay tribute to other colleagues, including my right hon. Friend the Member for Greenwich and Woolwich—who chairs the Select Committee—and my right hon. Friend the Member for Wentworth and Dearne (John Healey).

I am genuinely surprised that so few coalition Back Benchers have twigged what is going on in the Bill in relation to council tax. They do not seem to know what they are about to troop through the Lobbies to vote for. As we pointed out on Second Reading, and as has been said today, cutting council tax benefit by 10% while—rightly—protecting pensioners means an average 16% cut for everyone else, but the impact will not be felt evenly.

In one of the other documents that were published last week, the Government said, “We considered whether we should even things out to take account of the different proportions of pensioners in different local authority areas, but we rejected the idea.” As I have said, the impact will not be felt evenly, because some areas contain much higher percentages of pensioners than others. The list is like a roll call of seats represented by Government Members, but it seems that Government Members—with, I think, only two honourable exceptions during Second Reading and Committee—are either completely unaware that their constituents who are currently receiving council tax benefit will face higher council tax bills than elsewhere, because their areas contain a higher proportion of protected pensioners than others, or are not too bothered about it.

Let me say this, very gently, to Back-Bench members of the coalition parties. When their constituents turn up at their surgeries in a year’s time, waving a bit of paper and saying, “Why have you done this to me?”, they will be very, very bothered about what the Bill actually does. Indeed, all our constituents are likely to face additional

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cuts, because the forecast baseline for council tax benefit expenditure that is being used for the Bill is expected, miraculously—from my point of view and that of my hon. Friend the Member for Warrington North—to fall. Do Members really believe that demand for council tax benefit will decline in the next two years, in the light of the current state of the economy and the fact that we are now back in recession thanks to the Chancellor’s economic policy?

When we come to the default scheme to be applied if local authorities do not come up with their own scheme, what do we find? We find that the Government’s courage fails completely in following through the 10% reduction, because the default scheme in effect replicates the current scheme. Instead of Ministers having the courage of their convictions and applying the 10% cut across the board, they have ducked that, and are expecting everyone else to show the courage they themselves have refused to demonstrate.

In conclusion, whichever way we look at it, this part of the Bill is unfair and wrong, and no amount of trying to describe it as something else is going to alter what the changes in council tax benefit will do to our constituents on low incomes who need that support. We urge other Members to join us and vote against the Bill on Third Reading because it fails to meet the test on business rates that the Secretary of State set out when moving it on Second Reading and, as we have discovered in our discussions, it is even harsher in respect of cutting council tax benefit than appeared to be the case at first sight. In both those respects, the Bill reminds us of what this coalition Government are all about: they are unfair, out of touch and do not work—and nor, I fear, will the Bill.

9.41 pm

Mr Raynsford: The Government are having great difficulty in convincing anyone that the Bill does what they claim. They claim it is a localising measure, but, as we have heard, there is an extraordinary lack of support for it on their own Back Benches. Indeed, so far not a single one of their Back Benchers has spoken in support of it.

Local authorities are the supposed beneficiaries, but they, too, are profoundly unconvinced. Let us listen to what they say. London Councils says:

“London Councils supports the principle of business rate retention, but has grave concerns about the proposed changes set out in the Bill regarding the way in which the system will function.”

It adds:

“London Councils is strongly opposed to the introduction of local council tax reduction schemes, as set out in Clause 8 and Schedule 4 of the Bill.”

The Local Government Association says:

“In principle we support the localisation of National Non-Domestic Rates…The principle of full business rate localisation, which also ensures fair treatment of councils in areas with weak economies, would be a powerful move towards localism…However, the government proposes to keep a top slice amounting to 50 per cent of business rates for the Treasury, taking taxes paid by local businesses for local services and using them for local services based on national priorities instead. That is not a localising policy and goes against the Government’s stated commitment to localism.”

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If the Government cannot convince the people who are supposedly the beneficiaries of their reforms that they are acting in their favour, I am afraid they are in serious difficulty. The Government are, indeed, clearly in deep difficulty in this regard.

Incidentally, in the earlier debate I sought to intervene on one of the Ministers, the hon. Member for Hazel Grove (Andrew Stunell), as he had inaccurately claimed that the previous Government had done nothing to allow greater local discretion over discounts on second homes. I hope he will use this opportunity to put the record straight, because, as he will know, that is simply not correct. I am sure it was an unintentional error, however. The previous Government legislated to give local councils discretion to reduce the discount on second homes from 50% to just 10%. The Minister may wish to argue about the 10% figure, but there was good reason for deciding on it, and that was a clear extension of discretion to local government. It is therefore simply wrong to suggest that we did nothing in that regard. I hope the record will be put straight.

Andrew Stunell: If it helps the proceedings, let me say I am happy to acknowledge the factual account the right hon. Gentleman has given, and I am sorry if I gave a misleading impression earlier.

Mr Raynsford: I am very grateful indeed to the Minister for that gracious apology.

The first part of this Bill is a wasted opportunity, as it fails to deliver what people want in terms of a truly localist objective. The second part, which deals with the council tax benefit changes, is deeply flawed. The changes are damaging and will either cause serious hardship to recipients of council tax benefit or will put pressure on local authority budgets. It is not just the initial £500 million that will be a problem; increased costs may come later on as a result of further claims for council tax benefit, which may result from closures of local businesses or a further period of recession. That will be an extra risk for local government, which will get no support for central Government.

Finally, on the issue of administration, the Government are acting recklessly by rushing ahead without giving adequate time for proper preparation. It has been said repeatedly by those in the know, be they people in local authorities or their IT advisers, that the timetable is too tight to allow proper implementation. I will not go through the details, as we did so in the earlier debate, but it is reckless of the Government to ignore that and to claim that local authorities and others are happy with the timetable that the Government have set—they are not.

I shall end by quoting what local government has said on this. The LGA says:

“The tight timeframe for implementing this places an even greater burden on councils and we urge the Government to give councils the necessary time to do this”.

London Councils says that

“even under best-case scenario planning, the proposed implementation timetable may well be unachievable if council tax bills are to be sent out on time”.

That is not the action of a prudent Government; it is reckless and, I am afraid, it is typical of this Bill.

Question put, That the Bill be now read the Third time.

The House divided:

Ayes 276, Noes 204.

Division No. 7]

[9.46 pm


Adams, Nigel

Afriyie, Adam

Amess, Mr David

Bacon, Mr Richard

Baker, Norman

Baker, Steve

Baldry, Tony

Baldwin, Harriett

Barclay, Stephen

Barwell, Gavin

Beith, rh Sir Alan

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bradley, Karen

Brady, Mr Graham

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Bruce, Fiona

Bruce, rh Malcolm

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, Paul

Burt, Lorely

Byles, Dan

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carmichael, Neil

Chishti, Rehman

Clappison, Mr James

Clark, rh Greg

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Doyle-Price, Jackie

Duddridge, James

Duncan, rh Mr Alan

Ellis, Michael

Ellison, Jane

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Mr Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goodwill, Mr Robert

Graham, Richard

Grant, Mrs Helen

Grayling, rh Chris

Greening, rh Justine

Grieve, rh Mr Dominic

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, Stephen

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Haselhurst, rh Sir Alan

Heald, Oliver

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Horwood, Martin

Howarth, Mr Gerald

Howell, John

Hughes, rh Simon

Huhne, rh Chris

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Jackson, Mr Stewart

James, Margot

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr Marcus

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Latham, Pauline

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lloyd, Stephen

Lopresti, Jack

Loughton, Tim

Luff, Peter

Macleod, Mary

Maynard, Paul

McCartney, Jason

McCartney, Karl

McCrea, Dr William

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

Mensch, Louise

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

Offord, Mr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Parish, Neil

Patel, Priti

Pawsey, Mark

Penning, Mike

Penrose, John

Perry, Claire

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pugh, John

Randall, rh Mr John

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Robathan, rh Mr Andrew

Rogerson, Dan

Rudd, Amber

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Simmonds, Mark

Simpson, David

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Streeter, Mr Gary

Stride, Mel

Stunell, Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swinson, Jo

Syms, Mr Robert

Teather, Sarah

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Wallace, Mr Ben

Walter, Mr Robert

Ward, Mr David

Watkinson, Angela

Webb, Steve

Wharton, James

White, Chris

Wiggin, Bill

Willetts, rh Mr David

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Tellers for the Ayes:

Mr Philip Dunne and

Mark Hunter


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, Heidi

Allen, Mr Graham

Anderson, Mr David

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Banks, Gordon

Barron, rh Mr Kevin

Bayley, Hugh

Beckett, rh Margaret

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blears, rh Hazel

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Brennan, Kevin

Brown, rh Mr Nicholas

Bryant, Chris

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Ronnie

Caton, Martin

Chapman, Mrs Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Corbyn, Jeremy

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Tony

Curran, Margaret

Dakin, Nic

Danczuk, Simon

David, Mr Wayne

Davidson, Mr Ian

De Piero, Gloria

Denham, rh Mr John

Dobson, rh Frank

Docherty, Thomas

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Fitzpatrick, Jim

Flello, Robert

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hepburn, Mr Stephen

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hood, Mr Jim

Hopkins, Kelvin

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jowell, rh Tessa

Kaufman, rh Sir Gerald

Kendall, Liz

Khan, rh Sadiq

Lavery, Ian

Leslie, Chris

Lewis, Mr Ivan

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacShane, rh Mr Denis

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McDonagh, Siobhain

McDonnell, John

McFadden, rh Mr Pat

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Mearns, Ian

Michael, rh Alun

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Munn, Meg

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruddock, rh Dame Joan

Sarwar, Anas

Seabeck, Alison

Sharma, Mr Virendra

Sheridan, Jim

Shuker, Gavin

Skinner, Mr Dennis

Smith, rh Mr Andrew

Smith, Angela

Smith, Nick

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Sutcliffe, Mr Gerry

Thomas, Mr Gareth

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Watts, Mr Dave

Whitehead, Dr Alan

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Wood, Mike

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Noes:

Chris Ruane and

Susan Elan Jones

Question accordingly agreed to.

21 May 2012 : Column 955

21 May 2012 : Column 956

21 May 2012 : Column 957

21 May 2012 : Column 958

Bill read the Third time and passed .

21 May 2012 : Column 959

Budget (Coventry)

Motion made, and Question proposed, That this House do now adjourn.—(Bill Wiggin.)

10 pm

Mr Jim Cunningham (Coventry South) (Lab): Thank you, Mr Speaker, for granting this Adjournment debate, which I very much appreciate. I wish to speak about the impact of the Budget and the Government’s policies on Coventry, and I might touch on issues that affect the west midlands. My purpose in doing so is twofold.

First, many issues arising from the Budget will have a significant impact on the people of Coventry and should be debated properly. My constituents’ serious concerns regarding the effect of Government policies deserve to be raised. It is easy to discuss Budget policies in abstract terms, but we would do well to take the time to consider what they will mean for the regions and for people.

Secondly, there is a distinct pattern to the Government’s policies and rhetoric: they are far too London-centric, as some people would say. Therefore, it is vital that we hold debates that focus on the regions and cities across this country in order to draw attention to their concerns, which the Government frequently ignore. I am sure that much of what will be discussed tonight applies to other regions and cities hit by the Budget. The Government show not nearly enough understanding of regional issues or appreciation of just how much places such as Coventry are hit by their policies.

With that in mind, I want to outline why the Government’s optimism is misplaced, certainly as far as Coventry is concerned. We must not underplay the high level of unemployment currently being suffered. On Wednesday the Prime Minister assured us that overall unemployment was down and that the number of claimants of jobseeker’s allowance had decreased. Figures from the Office for National Statistics, which were published last week, reveal that there are 10,321 unemployed jobseekers in Coventry—three fewer than were counted in March.

The Prime Minister’s complacency about the employment crisis shows an unrealistic approach to the stagnation we are witnessing in Coventry, where 4.9% of 16 to 24-year-olds are out of work. That is similar to the figure for the west midlands overall but significantly higher than that for Great Britain, which is 4%. That is particularly clear when we look at the percentage of male jobseeker’s allowance claimants. Nationally, the figure is 5.3%, which is already shockingly high, but Coventry is suffering from having 6.7% of the male population claiming jobseeker’s allowance. It is clear that the slight improvements the Government are celebrating simply do not apply to Coventry.

Against the background of high unemployment, I wish to highlight the crucial role of the public sector in the growth of Coventry’s economy. Since the millennium, Coventry has benefited from significant redevelopment and regeneration, and the public sector has been crucial in that process. The concern now is that the Government’s public sector cuts will return Coventry to the hard times of the late ’70s, and certainly the ’80s, that many of us remember. It was a ruinous time in Coventry’s history and led to a whole generation struggling to reach their potential for decades after.

21 May 2012 : Column 960

Every public sector employee who loses their job through the Government’s public policy cuts is simply one more person without an income to spend on the local economy—one more person who will stop spending on businesses that in places such as Coventry are essential for stimulating growth in the local and national economies. Our public sector workers are a crucial part of our society and economy, and they do essential work for communities. It is ludicrous and poorly substantiated to claim that their work can be swiftly replaced by the private sector. There is certainly little evidence of that in Coventry.

The Government have said that they intend to rebalance the economy, and they aim to do so by cutting the public sector and replacing it with the private sector. They have certainly achieved the former, but there is little evidence visible in Coventry of the necessary investment in the private sector. The Chancellor needs a clear and vigorous industrial strategy to encourage the private sector growth that he hopes will replace the public sector.

That should be combined with a full jobs strategy, working on aligning the money going into the city with the people out of work, and targeting it at getting people back into work. That is particularly true of Coventry’s young people. Coventry saw an 87% increase in long-term youth unemployment last year, but there was nothing in the Budget to encourage any hope that this would be reversed.

The Chancellor promised that the Budget would deliver a great deal for businesses such as those in Coventry, but the Coventry and Warwickshire chamber of commerce was greatly disappointed. The chamber’s chief executive, noting that the Budget’s rhetoric on the promise for business was not matched by any content, said:

“If we’re honest, it was quite London-centric in many regards and that obviously wasn’t particularly welcomed. There were lots of small announcements that picked away around the edges but many of the things that weren’t mentioned caused most angst, such as empty property rate relief and the fact that business rates are going up.”

People throughout the country were hopeful about the prospect of a Budget that would offer real support to local businesses to allow them to grow, but they were generally disappointed by the reality, which gave little practical encouragement to allow Coventry businesses to expand, and that is likely to get a lot worse as the year progresses.

Coventry is famous for car making, but public sector workers drive much of the local economy. As we know, Becta and the Qualifications and Curriculum Development Agency are being abolished. It might seem an easy option to get rid of those education quangos, which employ a combined total of almost 800 people, many of whom are former teachers, but the relocation of the QCDA cost the Government more than £44million and came at a personal cost to many staff who relocated from London.

We cannot, furthermore, ignore the strain that these cuts put on the private sector. Friends Life, previously Friends Provident, announced that it plans to close its offices in Coventry by the end of the first half of 2012, and 428 staff are employed there. Owing to those cuts, Coventry city council will be forced by the Tory-led Government to cut more than 500 posts, possibly, over the next 18 months. The amount that the council spends in the local economy will also be reduced dramatically, and that will impact on council staff.

21 May 2012 : Column 961

The front-loading of cuts means that staff losses will be required at an early stage of the spending cuts, and that will affect families throughout Coventry. This is the overall impact: Coventry city council is expected to lose about £45 million over the next two or three years; and all of that will have a significant knock-on impact on local businesses and employment in the region

We can see what is happening in other sectors as the cuts and reforms begin to bite. For example, there are cuts of more than 20% in West Midlands police, equating to 2,500 jobs, and there are two parts to the Department for Communities and Local Government’s cuts for Coventry city council: formula grant, losing over £19 million; and specific grants, losing over £17 million. The council will not be able to continue to provide services at the same level. There will be far fewer grants, with a lower overall value, and the great concern is that many grant streams will end.

In the light of these destructive cuts, many people are extremely concerned about the proposed cuts to regional pay in the public sector. I cannot condemn this policy strongly enough. We in Coventry accept that living costs are far higher in London than they are in Coventry, but that is the reason for the London allowance and London stipend made available to many employees working in London. This is far removed from the idea that public sector workers should earn less for the same work because they live in places such as Coventry.

The Treasury says that public sector pay is 18% higher than in the private sector in some parts of the UK, but that argument demonstrates a flawed approach by which the Office of National Statistics continues to compare private and public sector workers on a like-for-like basis. They are not directly comparable, and it is wilfully blind and evasive to pretend that they are. Two thirds of public sector workers are women, compared with about 40% of those in the private sector. Public sector workers tend to be older and more highly qualified. Professions such as nursing and teaching entail workers remaining in their profession for a long time, building up skills and salaries. None of those are characteristics that the public sector should be ashamed of. The private sector, by comparison, includes workers at the other end of the economy such as those in retail, catering and leisure. Industries in the private sector often pay their workers very low wages, and that skews any fair comparison of the sectors.

The public sector makes up roughly 20% of the work force, while the financial sector makes up 20% of the economy. More meaningfully, public sector wages are far from high by comparison with those in the private sector. I have always believed in lifting people up rather than lowering them down. Public sector workers are already being hit very hard with frozen salaries, higher pension contributions, and higher living costs. We cannot overestimate the negative impact on Coventry’s economy that would result from local public sector workers earning lower salaries. That would take money out of the regional economy, and the stunting effect on growth would outweigh any benefits to the Treasury. I therefore call strongly on the Government to allay the fears of those in Coventry who are worried about the prospect of regional pay cuts.

Against those fears for the regional economy, let me touch on the impact of the Government’s policies on the vulnerable people of Coventry, who will be hit from

21 May 2012 : Column 962

many directions by their deficit reduction plan. Pensioners have been dealt a blow by the Government as the winter fuel payment has been slashed by up to £100. According to the BBC, family fuel costs have risen by about £1,250 over the past two years, and mortgage interest rates are starting to creep up, which will affect many families. Disabled and ill people are suffering from the removal of the mobility component of the disability living allowance. Coventry’s poorest residents are being undermined in the justice system by the removal of face-to-face legal advice in favour of a cheaper phone line. These are but a few of the policies that are having a huge negative impact on vulnerable individuals, who are now having opportunities to turn to public services taken away.

I am deeply concerned about the local provisions for our young people. In June, £335 million was taken from the council through the abolition of Building Schools for the Future, which has yet to be replaced despite many promises about announcements. The Government cannot simply remove this vital investment from Coventry without even suggesting an alternative, let alone funding one. The Budget bore no reference to allocations of funding for school buildings. Aside from the obvious implications for Coventry schools, the Government are missing a great opportunity to stimulate the construction industry. I understand that the Government’s private building scheme is expected to rebuild between 100 and 300 schools nationally, but they have been dragging their feet on this issue for 20 months. Coventry city council has made it clear that some schools are in dire straits and urgently in need of investment. Without details of the Government’s plans, the council is unable to make its own plans.

As of April, the Connexions careers service has been operating on a budget more than 70% smaller than in April 2010. That service gives young people the skills and confidence they need to get in to the workplace, and its downsizing will no doubt contribute to the high youth unemployment that we experience as a city and as a region.

The children, learning and young people’s directorate has announced the loss of a further £1.2 million as a result of the 5% cut to the standards fund. The council had been relying on those crucial retention funds, but they will not be transferred to the next financial year.

On that note, the Friargate development, which will revitalise and transform Coventry city centre, was going ahead on the expectation that Coventry would be one of the eight core cities to benefit from the tax incremental financing scheme. The Deputy Prime Minister told the local authority in 2010 that Coventry would be a recipient of that scheme. Not only is Coventry excluded, but the pot of money has been reduced to £150 million. The council was relying on that money, which was to be paid back on a tax basis, to allow the development to go ahead.

The abolition of the funding from regional development agencies means that there is little funding to lever in private sector investment for large-scale redevelopment projects. Some colleagues will remember that Coventry and Warwickshire were led to believe that they would get an enterprise zone. Once again, they lost out. I therefore call on the Minister to reconsider the use of tax incremental financing to allow the city to grow. I understand that the council is also looking to take part in the city deals initiative. The city’s project is urgently in need of that money.

21 May 2012 : Column 963

All of that will have an irreversible effect on the economic growth of the region and of Coventry. The leader of Coventry city council estimates that up to £25 million will be taken out of the local economy. The public and private sectors will not be able to invest in regeneration and infrastructure in the region. With the loss of the £355 million schools programme and the missed opportunity for the building industry, it is clear that the Government are wilfully blind to the devastating effect of their policies in Coventry. In addition, Coventry university hospital has to find an additional £28 million over the next year or two. The Government need to stop thinking only of London and think more about the other regions and cities that make up this country.

10.16 pm

Mr Geoffrey Robinson (Coventry North West) (Lab): Thank you, Mr Speaker, for granting this debate, and I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing it. There may not be many of us here this evening, but you are still in the Chair, Mr Speaker, and we will be able to speak directly, without a lot of interruptions, beyond this Chamber to the people of Coventry about the list of indictments, which my hon. Friend stated so powerfully, of the effects that the Government’s policies will have on our city, whether or not that is their intention.

My hon. Friend gave a long list of problems that the Government’s policies are creating for Coventry. I will start with Friargate. The inner city of Coventry is pretty well known. During the war, it was the most bombed city in the country, starting with the November raids right back in 1941. Afterwards, everybody thought that they owed a particular debt to Coventry, which was wonderful—I was not there at that time, of course—and the cathedral and the city centre were rebuilt. City planning was such at that time that good money, planning and thinking were put into it. A ring road was put around the city, and to this day traffic flows around Coventry and in and out of it marvellously well.

The trouble is that the city centre has become derelict. People do not eat there socially, congregate there or spend time there. It is desolate, which leads to all those activities that we do not want to see in any of our city centres. We need a revision of the original city planning more than 50 years ago, which is long enough.

Early on, the Government thought of an imaginative and good scheme called the tax incremental financing scheme, which was to be partly funded by incremental taxes from the locality, region or city, but would have Government encouragement and power behind it. No less a person than the Deputy Prime Minister promised that we would be beneficiaries of it. Sadly, however, we are used to his broken promises,. I say this as an admirer of his, but he has made and broken many promises, including on tuition fees. Despite being given a specific promise that we would be included in the eight cities that could contribute to their own rehabilitation, which we desperately needed, we have not been.

I understand that all is not lost. A new initiative—an initiative rather than a scheme this time—has been put forward in which Coventry has been invited to take part, and our council has responded positively. I hope that Coventry can usefully and profitably participate in the city deal initiative. I regret to say that the city centre is a blot on the copybook of our huge post-war efforts

21 May 2012 : Column 964

to rebuild the country and its cities. We did not succeed with it, and we need to do so in the near future.

Another area of great disappointment has been Coventry’s schools. The cancellation of the Building Schools for the Future programme has been a great setback. We were on the point of signing contracts, but as a responsible council, Coventry held back, and the Government applauded it for doing so. We urged it to sign the damn things and get the contracts signed, but no, it held back.

Two schools in my constituency were affected. One, Woodlands, is an exemplary comprehensive built after the, war with the usual ’50s and ’60s concrete construction. The other, President Kennedy school—the name tells the date—was constructed on similar principles. Those schools are now in urgent need of replacement, but because the council did not want to behave even slightly irresponsibly and would not sign the contracts, we lost out by a total of £335 million, as my hon. Friend mentioned. I visit those two schools regularly and work with them. The attitude of the Secretary of State for Education towards them is very off-hand. It is not that I mind personally, because it does not hurt me, but he seems to ignore the fact that those schools had a good and reasonable case for making a demand on the public purse.

The Secretary of State wrote in similar terms to Becta and to the Qualifications and Curriculum Development Agency. In fairness, the Conservatives said before the election that they would get rid of the QCDA—typically, they said that without hearing the case, but at least they had said that that was what they were going to do. The letter to the QCDA was, if I may say so, peremptory and impolite; it was unworthy of him, but at least they had said what they would do. Becta, though, was suddenly closed without anybody knowing anything about it. It seemed as though Coventry was being targeted again—I do not intend to make the obvious military historical reference here—as the centre that had to be hit.

My hon. Friend the Member for Coventry South mentioned what the chief executive of the Coventry and Warwickshire chamber of commerce had said. I promise that she is no supporter of mine or of the Labour party. I am pleased to see the Economic Secretary on the Treasury Bench, because I would like her to listen to what the chief executive said. The best that she could find to say was, “If we’re honest”—that is very difficult for Governments to do, as I appreciate—the Budget

“was quite London-centric in many regards and that obviously wasn’t particularly welcomed.”

That is the final judgment of a chamber of commerce chief executive, a representative of the very people the whole Budget was meant to be about supporting.

I put it to the Economic Secretary, who is to respond to the debate, that we desperately need help. We do not want handouts, we want help up. That is what we are after. If only she would meet us halfway, we could still do great things in Coventry, but we need a Government who are capable of responding to the need that exists.

10.24 pm

The Economic Secretary to the Treasury (Miss Chloe Smith): I shall do my best in the six minutes remaining to cover a selection of the points raised by the hon. Members for Coventry South (Mr Cunningham) and

21 May 2012 : Column 965

for Coventry North West (Mr Robinson). I thank both for the passion with which they have spoken about their city in this interesting debate.

The Government made clear in Budget 2012 that our priorities are threefold: to create a stable economy; to create a fairer, more efficient and simpler tax system; and to introduce reforms to support growth. The Budget and the national infrastructure plan published the preceding autumn set out the Government’s latest steps towards achieving those priorities, based on a new model of sustainable and balanced growth, including in Coventry and more widely.

As the hon. Gentlemen made clear, the west midlands is not without its challenges, but the region remains a significant contributor to the national economy. The reforms set out in the Budget will give businesses and individuals in the region a further boost by cutting corporation tax by an additional 1% on top of the rate cuts announced last year. From April this year, the rate will be reduced from 26% to 24%—it will eventually fall to 22% in 2014.

The reforms also provide a boost by increasing the personal allowance by £1,100, taking 75,000 people in the west midlands out of tax altogether, and by increasing the Growing Places fund to provide additional funding for the infrastructure needed to unlock developments that will lead to jobs and growth. Local enterprise partnerships in Coventry and Warwickshire will receive a further £4.1 million. We confirm that Birmingham has been selected to become a super-connected city, and we are investing almost £60 million in stalled development projects within the west midlands. Furthermore, we will support individuals and families to buy new build property with just a 5% deposit through the NewBuy scheme, and increase the maximum right-to-buy discount to £75,000, which is £49,000 more than the current west midlands limit of £26,000.

The hon. Member for Coventry South spoke of youth unemployment, which I agree is a vital issue for our country. He will be aware of the answer given to him by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), on 13 December 2011. He directed the hon. Gentleman

“to the new programme recently announced to make it easier and simpler for SMEs to take on apprenticeships”,

and said that the Government

“are providing funding to the tune of up to £1,500 per apprentice.”—[Official Report, 13 December 2012; Vol. 537, c. 254WH.]

That scheme is to be welcomed.

The challenge laid down by the hon. Gentlemen, which the Government have taken up, was to return the UK economy to sustainable economic growth that is more balanced across the country. We have established local enterprise partnerships and enterprise zones.

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Mr Robinson: Will the Minister give way?

Miss Smith: I have only three minutes left, but if the hon. Gentleman wishes to intervene, I will give way.

Mr Robinson: The Minister mentioned the west midlands, but could she not say something about Coventry? She even mentioned Birmingham. I made some unfortunate remarks about Birmingham not so long ago—I will not repeat them—but we are talking about Coventry tonight.

Miss Smith: The hon. Gentleman pre-empts my next paragraph. I should like to draw his attention to the successful bids in the Coventry and Warwickshire LEP area, including the Elonex advanced engineering supply chain and Alamo Manufacturing bids, which I am sure he welcomes, because they and others will create many thousands of jobs in the west midlands.

The hon. Member for Coventry South said there was little evidence of private sector growth. I simply dispute that statement. The core city deal for Birmingham, which was mentioned by both hon. Gentlemen, will have spillover effects for the wider west midlands region, although I hear the call for me to speak about Coventry in its own right.

The hon. Member for Coventry South raised concerns about the impact of regional pay—those were his words—across the country. I reassure him that the Government are not setting out detailed proposals at this stage, but simply asking the experts how public sector pay might better reflect local markets. He will be aware that the Institute for Fiscal Studies made an estimate of the public sector pay premium—he quoted off-hand some figures in that respect. In principle, the premium has the potential to hurt private sector businesses, which need to compete with higher public sector wages. A premium could prevent them from expanding and lead to unfair variation in the quality of public services.

On public spending, the previous Government left an appalling financial mess behind, which this Government have a moral obligation to sort out. We have delivered a challenging but fair settlement for local government, including for Coventry. The formula grant in Coventry will be £493 per person in 2012-13. The average per person across England is far lower, and it is £200 to £300 per person in some southern areas. That reflects the higher level of need in Coventry.

I thank the hon. Gentlemen for speaking in the debate. I believe the approach set out in the Budget is a strong one and am confident that it will benefit all areas of the country, including Coventry and its environs.

10.30 pm

House adjourned without Question put (Standing Order No. 9(7)).