Local Government Finance Bill

Iain Wright Excerpts

Wednesday 31st October 2012 Commons Chamber

[James Duddridge]

rose—

[Mr Iain Wright (Hartlepool) (Lab)]

rose—

[Robert Neill]

There is a bit of queue. I shall give way to my hon. Friend the Member for Bedford (Richard Fuller) first, as he rose first.

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[Robert Neill]

You are, as always, the guardian of rectitude in this place, Mr Deputy Speaker, and, as you know, I am always the willing servant of rectitude in these matters. The point that I was making was that we had indeed moved on a great deal since 1974, in terms of thinking as well as chronology. The situation is better than it was. However, we still have to deal with some entrenched thinking. I believe that, by promoting pooling, the amendment can break down some of that thinking, which, as was pointed out by my hon. Friend the Member for Bedford, can spill into other areas of policy decision-making as well as those relating to local government finance. I hope that, by encouraging economic investment, pooling will make it easier and more desirable to provide the educational opportunities cited by my hon. Friend in the context of free schools. His point was well made: all the various legislative measures interact as part of a broader localism agenda.

Now I must not forget the hon. Member for Hartlepool, who tried to intervene earlier.

[Mr Iain Wright]

I am grateful to the hon. Gentleman, who is being characteristically generous and engaging. I want to move on from 1862, when he was first elected, and away from 1974, when you were born, Mr Deputy Speaker—I hope to catch your eye again: that is why I am trying to be as helpful as possible—to today. Has the hon. Gentleman had a chance to look at Lord Heseltine’s review, which was published today, and which strikes me as very significant in relation to local economic development? In particular, has he had a chance to read recommendation 11? It states:

“All two-tier English local authorities outside London should pursue a path towards unitary status. The Government should encourage this and work with authorities to clarify the process and enable it to happen.”

Notwithstanding his earlier comments, does the hon. Gentleman agree with that?

[Robert Neill]

I must preface my remarks by saying that I cannot pretend to have read all 200-odd pages—

[Mr Wright]

There are 228.

[Robert Neill]

I note that the hon. Gentleman has both read them and counted them. Anyway, I cannot pretend to have read all of Lord Heseltine’s tour de force of a report, but the cursory reading that time allowed me while I was preparing my brief notes for the debate—[Laughter]—did give me a flavour of that helpful and valuable document. I think that it contains much that we, as a Government, would wish to take on board. As for the specific point raised by the hon. Gentleman in relation to recommendation 11, I do not agree with it, for reasons that I have already given. I believe that an imposed form of unitary restructuring is unnecessary, and that the devices and tools given to local authorities by the amendment reinforce the reasons for not following the route proposed by Lord Heseltine.

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[Robert Neill]

My hon. Friend is very kind. He knows a great deal about this topic, as I know from having visited Bedford on a number of occasions when we were in opposition and he was the prospective parliamentary candidate.

[Mr Iain Wright]

So it’s your fault!

[Robert Neill]

I will be delighted to take responsibility for my hon. Friend’s arrival in this House.

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[Brandon Lewis]

I shall try to cover the general points raised in the excellent speeches that we have heard and then deal with the specific questions asked by the hon. Member for Warrington North (Helen Jones) and others.

The proposals on the retention of business rates represent a fundamental shift in the way in which local authorities are funded. They give councils a strong financial incentive to drive local economic growth. We will ensure that there is a stable starting point for the scheme so that no council is worse off as a result of its business rates base at its outset, and that will be achieved through a system of tariffs and top-ups that will be fixed in future years so that councils benefit from the growth of their business rates. Tariffs and top-ups will be uprated by inflation to ensure that a major part of authorities’ top-up income under the scheme is not eroded in real terms.

We have also proposed further protections to ensure that councils can meet local needs, including a safety net—I will directly deal with the specific question asked by the hon. Member for Warrington North later—that will be funded by a levy that recovers a share of any disproportionate gain from growth. The safety net will help to ensure that service provision does not suffer as a result of any volatility in a council’s business rates base. We announced that we intended to set the safety net threshold at a level between 7.5% and 10%, with the proportional levy ratio at 1:1, subject to consultation. That consultation took place over the summer; it has now ended, and we will consider the responses that we received before we take a final decision for this year’s settlement.

[Mr Iain Wright]

During yesterday’s excellent debate on business rates, I made the point that one business in my constituency—the nuclear power station—contributes 15% of all business rates collected in Hartlepool. The Minister says that the safety net will be between 7.5% and 10%, so how will the policy address my specific constituency concerns?

[Brandon Lewis]

I thank the hon. Gentleman for his question. I will come to that specific point, as the hon. Lady raised a similar one.

Where councils want to join forces to pool their business rates, sharing the rewards and risks with their neighbours and thinking together strategically about how they should invest the money—a topic on which we have spent some time this afternoon—they will be able to do so. I will come back to that in response to the points raised by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill).

The proposals for business rates retention will give all local authorities unfettered access to tax increment financing. There will be no constraints. From April 2013 local authorities will be able to get on with implementation. We are also making £150 million available to fund a limited number of new development deals—projects in the core cities.

A number of Members commented at length on issues related to pooling. My hon. Friend the Member for Bromley and Chislehurst was the first to raise this in his remarks. I record my thanks to him for the fantastic work he did in bringing the Bill to the point at which I inherited it. He gave a great speech outlining some of the thoughts underlying the Bill and answering a great number of questions from Members to help everybody in the House have a fuller and better understanding of where the Bill is coming from and therefore what it aims to deliver.

Business rates retention changes the ground rules for local government and moves power back to where it should be. To pick up on a point made by my hon. Friend the Member for Peterborough (Mr Jackson), it effectively puts local money back with local people in local communities—local money for and by, to coin a phrase, local communities.

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[Mr Iain Wright]

Could pooling of business rates apply sectorally as well—for example, the automotive industry? Could Sunderland city council, with Nissan in its patch, link with Coventry council, where Jaguar Land Rover is located, in order to push forward the UK automotive industry? Does the Minister anticipate that?

[Brandon Lewis]

The hon. Gentleman makes a very interesting suggestion. As I said, there is no county boundary restriction on local authorities working together. One of the more imaginative things that we are seeing in local government generally is that authorities are not delineated by their geographic boundaries. We have seen, for example, the excellent shared services and other work between South Holland and Breckland district council, which do not share a geographic boundary but have found a way of working together. Such arrangements are possible and councils should looking for such interesting and exciting opportunities to work together.

We have, however, said that there should be a clear rationale for the geographic coverage of a pool if councils are to work together. It is important that councils have the flexibility to do what is right for them. That has worked well in local enterprise partnerships, on which a number of speakers have commented this afternoon. One of the reasons that LEPs are gaining such support and will be such a long-term success and powerhouse is that they have not been artificially designed and drawn on a map by people in Whitehall. They have come about as a result of communities, business organisations and local authorities coming together to decide what works for them and their community.

Some interesting structures have developed. For example, in my part of the world, Great Yarmouth, the New Anglia partnership crosses the county boundary between Norfolk and Suffolk. It focuses much of its time on the energy industry across Lowestoft and Great Yarmouth. It goes further in that it does not pick just one piece of land as its enterprise zone. It has a number of different sites because that is what the local business people, communities and local authorities coming together thought would work best for them. That is showing success already.