Local Government Finance

Debate between Clive Betts and Alison McGovern

Wednesday 17th December 2025 Commons Chamber

[Alison McGovern]

I am glad that the hon. Gentleman was listening when I gave my earlier answer on rurality. We have recognised where there are extra cost pressures, and I will happily discuss this in detail with him if he wishes. This is recognised in the statement and in the data that we have taken account of. The new deprivation statistics are much more fine-grained, and they can find poverty wherever it is, whether it is in a town, a city, a village, a rural area or wherever.

[Mr Clive Betts (Sheffield South East) (Lab)]

I do not know whether my hon. Friend is as surprised as I am that the official Opposition could not even bear to mention the word “austerity” when they responded. Before we move on, there was a case of amnesia from the Lib Dems, who forget their role, under the coalition Government, in some of the worse cuts of all that local government experienced. I therefore welcome the Minister’s comments about deprivation. The poorest councils got hit hardest during austerity by the Conservatives. I thank her for putting tackling deprivation at the heart of this settlement.

I have two challenges. The Chair of the Select Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), reiterated what we said in the Select Committee in the last Parliament: council tax is regressive and has to be reformed. The Minister mentioned the need for long-term changes to the whole way in which social care is funded. Would she at least begin a conversation across parties to try to get long-term agreement about how this should be done? It has failed over and over again through parties squabbling over the details. We need a long-term settlement. Can we at least start those conversations now?

[Alison McGovern]

My hon. Friend is extremely experienced in these matters and remembers, as I do, the impossible situation that councils, particularly in the poorest areas, were put in under the Tory Government. He is right to point out that the Lib Dems did play a small role in that, too. On his questions, I always read in detail the Select Committee’s reports, and I will do that with the ones he mentions. The Government have set out the pathway, making the immediate change that I said on social care and asking Baroness Casey to drive us towards that long-term vision that he points out. That is exactly what we need to do; we need to fix this for the long term.

Business Rates

Debate between Clive Betts and Alison McGovern

Wednesday 4th December 2013 Commons Chamber

[Mr Betts]

It has to be quick, and it will need more resources being put into it as well. The Minister cannot do this at nil cost. It will be interesting to see how this develops. Hopefully, as my hon. Friend says, it will develop very quickly.

In the longer term, we need a complete review of the business rates system. We need to look at the way in which valuations are carried out. The Local Government Association has called for that review, and I thoroughly support it. It should form part of a wider review of local government finance, and the Select Committee, which I chair, will now be carrying out a review of fiscal devolution to cities on the back of the London Finance Commission, which the Mayor of London has commissioned and which Labour and Tory London boroughs and the core cities have supported. I will not come to a view about whether its proposals are right, but it is interesting that there is now a call for a wider look at the whole basis of property tax in this country and the extent to which it can be devolved down to local authorities.

Were the Chancellor to make any changes tomorrow to business rates for next year—and we hope there will not be a commitment to increase business rates by RPI, as has been the case for the past few years—any reduction must not come at the expense of local councils, which are very hard pressed at this time of austerity and restraint on their spending. Any commitment must be made clear. We need to know the impact of lower business rates not just on councils as a whole but on each individual council in the country— I ask the Minister to put the details in the Library—once the levies and safety nets are taken into account. That must be made explicitly clear for their benefit.

Business rates are a real problem for firms up and down the country. The percentage of their turnover paid in business rates has increased, and that is putting real pressure on small businesses in particular. If the Government recognise that, and recognise the need for action, why are they so mealy-mouthed as to say, “No increase in line with RPI—we will simply reduce that increase to 2%”? If there is a problem, which the Chancellor might recognise tomorrow, why not go that bit further and at least freeze business rates or, even better, take up the suggestion of my hon. Friend the Member for Chesterfield (Toby Perkins) and cut them? If there is a problem, why not address it properly? If there is not, why go for a 2% increase? The Government have a fundamental question to answer on this issue.

The Government must also deal with the disproportionate impact of business rate increases. Firms in different parts of the country are suffering in different ways. In parts of the country where demand has not recovered, where growth has not increased and where there is poverty and deprivation, businesses are suffering more. A revaluation would have addressed precisely that.

[Alison McGovern (Wirral South) (Lab)]

Does my hon. Friend agree that that gives the lie to the Government’s claim to have rebalanced the economy?

[Mr Betts]

Absolutely. The economy is not rebalanced and some areas are doing better than others. The areas that are doing less well have businesses that are struggling and that is why revaluation would have been important.

The Minister says that a revaluation would somehow affect businesses adversely. No, it would not. A revaluation should be a zero-sum game as far as businesses are concerned. The Minister said that there was no benefit to the Treasury. Every previous revaluation has had dampening put in to protect firms that are likely to see a significant increase in their rates. There has always been a net cost to the Treasury as a result of any revaluation, particularly when there are big changes—as there could well have been if a revaluation had been carried out. The cost of any revaluation would have been borne not by businesses but by the Treasury, and I suggest that that is why the Government did not go ahead with it in the end. It was another stealth saving by the Chancellor to try to ensure that they did not have to put in the costs of protecting firms from large increases. At the same time, of course, he has caused additional costs for firms that are struggling in the less prosperous parts of the country, which has been the real disadvantage of not going ahead with revaluation.

I will also be critical of the previous Labour Government, who did not go ahead with a revaluation of council tax. In the longer term, delaying valuations has had major disbenefits. There might be short-term advantages, as it does not cause problems for the Government in explaining to some people why their taxes have gone up, but in the medium and longer term it is always a disaster to put off revaluations, because when they are eventually handled they become even larger, more difficult to deal with and more difficult to explain. That is the simple reality.

If we are thinking about the retail sector, we must consider the greater benefits that the postponement of revaluation allows for out-of-town shopping centres. When we consider revaluation and the whole system in future, we must consider the fact that the value of rates for out-of-town shopping centres, compared with those for smaller shops in the high street, is not fair at all. Were we to have a revaluation now, I would suggest that we took account of the fact that an increase in empty properties on the high street would likely see the valuation of shops there go down. If the planning system works as the Government intend and we have a town and city centre-first policy, the constraint on future out-of-town developments should put a premium on the existing developments and cause a relative increase in the rateable value of such properties. Postponing the revaluation has had a disadvantage for the high street and an advantage for out-of-town centres, and we should take account of that.

There are a lot of issues for the Government to consider. We need a longer term reform of business rates and to go back and consider revaluation, as it was not fair to postpone it. If there is a problem and we are to have some change to the business rates next year, let us make it a cut not—