Local Government Funding
Rishi Sunak Excerpts(8 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
May I start by echoing the sentiments of the Secretary of State and hon. Members on both sides of the House? Within the short space of time that I have served as Local Government Minister, I have seen countless examples of the lengths to which councils go to serve their communities. It is a privilege to represent them in the Government, and I commend the hard-working staff and councillors delivering the services on which our communities depend.
I am proud that this Government are listening to those councils, recognising the pressures they face and responding to their concerns. That is why local government is seeing a real-terms increase in financial resources over the next two years. That is why local government is benefiting from an extra £2 billion in social care funding, and that is why local government is keeping billions more of its own money through business rates retention.
Maria Eagle
The Minister has just asserted that local government will have a real-terms increase. Does he accept that, as the National Audit Office has said, a 49.1% real-terms reduction in that funding has occurred in the past seven or eight years since the Conservative party has been in power?
Rishi Sunak
As the National Audit Office pointed out, this Government were alert to the requirements of adult social care building as a pressure. This Government responded by delivering extra money for adult social care.
In general, what this Government are doing is working. In adult social care, we have seen delayed transfers of care fall by 34% in the past year. In housing, we are seeing record levels of new home building and infrastructure investment, and from Teesside to the west country, we are seeing areas seize the opportunity to shape their own future. My hon. Friend the Member for Sutton and Cheam (Paul Scully) was absolutely right when he said that other people may paint a gloomy, downbeat picture, but there are examples of councils delivering for their constituents across the country, and as he pointed out, Kingston is doing a fantastic job.
Indeed, according to the LGA, over 80% of people are satisfied with their local area as a place to live, and satisfaction with local council services has remained entirely stable. To ensure that that continues, it is right that we update and modernise our current funding formulas. In the short term, I want to reassure the hon. Member for Garston and Halewood (Maria Eagle) that the Government are not clawing back section 31 grants, as she suggested might be the case. My right hon. Friend the Secretary of State confirmed that last week.
My hon. Friends the Members for Christchurch (Sir Christopher Chope) and for North East Hampshire (Mr Jayawardena) rightly asked about negative RSG. The Government are aware of the strength of feeling on that issue. We are planning to look at fair and affordable options for addressing that problem and will consult on it shortly after the local elections.
My hon. Friends the Members for St Austell and Newquay (Steve Double) and for Lewes (Maria Caulfield) spoke passionately about the rural areas they represent. They highlighted the historical unfairness in funding that their councils have suffered and why they think that should be addressed. I can confirm to them that understanding the particular costs of delivering services in rural areas and analysing the relative resources they have will absolutely be considered as part of our fair funding review.
My hon. Friend the Member for Bexhill and Battle (Huw Merriman) spoke about the importance of getting population growth right. Areas such as his have seen increases in the number of those of a particular age, which puts costs on to certain service areas. He is right to highlight that the new funding formula should use up-to-date population information and that it should be dynamic and respond to what is happening on the ground.
We have heard about children’s services, and it is absolutely right that we focus attention on vulnerable young people who are denied the stability that many of us sitting in the Chamber have enjoyed. It is a privilege for me to be the Minister responsible for the troubled families programme. Delivered in partnership with local authorities, the programme will invest £1 billion to help the most vulnerable in our society. I spent a morning last week in Liverpool hearing at first hand from the families themselves about the difference that this programme is making to their lives. Conservatives like to measure success by the outcomes we achieve, not just the amount of other people’s money that we spend, and the results are hugely encouraging.
Alex Cunningham
Does the Minister recognise the very specific link between deprivation and the number of children taken into care by our local authorities, and what is he going to do about it?
Rishi Sunak
What the Government are already doing about exactly that is working with the Department for Education on the most thorough and extensive piece of work ever undertaken to understand precisely the drivers of the need for children’s services, which of course includes deprivation. The report will conclude later this year or early next year, and I am sure the hon. Gentleman is looking forward to reading the results.
Beyond that, the troubled families programme is driving innovation on the ground, changing the way that local authorities work and bringing previously disparate providers of care together to help those who need it most. Other people may like to talk of compassion, but we in the Government are delivering it.
We have heard a lot about spending, but curiously rather less from the Labour party about who is paying for it all. We in the Government know who ends up footing the bill—ordinary hard-working tax payers. Over the past few months, the Labour party’s plans have become abundantly clear. We have heard about a radical change to council tax, a new local income tax, the abolition of the referendum tax limit and, as if that was not enough, a garden tax. Under the previous Labour Government, council tax doubled, and we all know that history tends to repeat itself. I can tell the House that this Government will always be on the side of hard-working tax payers. My hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) was absolutely right to say that we should be getting them value for money and keeping their bills low.
Maria Caulfield
Will my hon. Friend confirm that, under the Labour party’s garden tax plan, 10 million families would have to find £4,000 a year more?
Rishi Sunak
My hon. Friend is absolutely right to highlight the thousands of pounds that will be loaded on to the bills of ordinary working families. [Interruption.] Labour Members do not like it, but it is true.
We now know that council tax is lower in real terms than when we came into office, service delivery is high and innovation is thriving. This Conservative Government are strengthening our communities, and Conservative councils are keeping their taxes low. To conclude, it could not be clearer what happens when people vote Conservative—local government costs them less and delivers them more.
Question put.
Business Rates
Rishi Sunak Excerpts(8 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
On 30 March 2017 the Member for Nuneaton (Mr Marcus Jones), the then Minister for Local Government in a written ministerial statement set out the Government’s policy on the treatment of plant nurseries in England for the purposes of business rates stating that:
“Since at least 1928, plant nursery grounds have been treated by the Valuation Office Agency as exempt from business rates as part of the general exemption for agriculture. However, following a recent Court of Appeal decision, the Valuation Office Agency has started to bring into business rates buildings at nursery grounds including structures such as poly-tunnels. The exemption for agricultural properties is an important part of the rating system. It ensures that large areas of agricultural land and buildings are not liable to a property tax which could have a significant impact on the cost of farming.”
I can confirm to the House that the Government’s policy remains that land and buildings at plant nursery grounds should benefit from the agricultural exemption for business rates.
The Government will, therefore, amend the Local Government Finance Act 1988 to ensure both agricultural land and buildings at plant nursery grounds are exempt from business rates. We will bring forward legislation at the next suitable opportunity to meet this commitment. In doing so the legislation will be amended retrospectively, with effect from 1 April 2015. This will allow the Valuation Office Agency to remove from the rating list with effect from 1 April 2015 any plant nurseries which then fall to be exempt from that date.
This change will ensure that agricultural land and buildings are not liable for a property tax which could otherwise have an impact on the cost of farming and produce. It supports the Government’s commitment to a vision for a productive, competitive, sustainable UK agricultural sector.
The previous WMS, 30 March 2017, can be found at:
http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statements/?page=1&max=20& questiontype=AllQuestions&house=commons &use-dates=True&answered-from=2017-03-30&answered-to=2017-03-30.
[HCWS606]
Children’s Playgrounds
Rishi Sunak Excerpts(8 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate the hon. Member for Nottingham East (Mr Leslie) on securing this important debate. I enjoyed listening to him and thought he made a thoughtful contribution, as did the hon. Member for Great Grimsby (Melanie Onn) and my hon. Friend the Member for Henley (John Howell).
The breadth of my portfolio at the Ministry of Housing, Communities and Local Government means that I have the privilege of discussing a wide range of areas that affect people’s daily lives. I am grateful to the hon. Member for Nottingham East for raising the important issue of playgrounds. He spoke passionately about how such areas bring communities together and promote health, fitness and an appreciation of the outdoors. Like him, I am a father—I have two daughters—and I enjoy sports, so I recognise the value of having safe, welcoming, open public spaces.
Ensuring that playgrounds, parks and other open spaces are available and accessible is, in the first instance, the responsibly of individual local authorities, as the hon. Gentleman recognises. I want to say a few words about how my Department is supporting the sector in that area. I will touch on resources, which he rightly talked about, so I hope that will be of interest to him, and then I will draw on the work that is being done across Government. As he acknowledged, other Departments have a stake in this. I will bring their good work to the fore today.
On the issue of resources for local government, I would be the first to say that local authorities have done a commendable job over the past few years in delivering high-quality services, including adult social care and children’s services, and improving our roads, public spaces and playgrounds, in what has no doubt been a difficult financial climate. They should be commended for that.
Luke Hall (Thornbury and Yate) (Con)
I congratulate the hon. Member for Nottingham East (Mr Leslie) on securing this really worthwhile debate. Will the Minister join me in commending South Gloucestershire Council, which announced in the past couple of weeks that it will invest £460,000 in green spaces, including a number of parks and playgrounds around Yate and Chipping Sodbury, which will make a huge difference to the community? I want to put on the record my thanks to two local campaigners, Sonia Williams and Matt Lewis, who have constantly raised the issue.
Rishi Sunak
I would be delighted to congratulate my hon. Friend’s council. That is an example of communities working with their local authority, despite the difficult overall climate, to find creative solutions that will benefit the community. There are examples of that happening all over the country. I am grateful to my hon. Friend for raising that example, and I congratulate all those involved in that positive outcome.
On resources for the sector overall, the recent local government finance settlement ensures that the sector will have £45.6 billion in the next financial year, rising from £44.3 billion in the financial year we are just finishing. Nottingham will have more than £500 million in core spending power over that spending review period, the last two years of which we are about to enter, and it will be for the council—whether in Nottingham or elsewhere—to decide how best to prioritise its resources among all the competing claims.
The settlement is the third year of a four-year deal, as I mentioned, and it was accepted by 97% of councils, including that of the hon. Member for Nottingham East. I am glad that they have benefited from the certainty and stability brought by knowledge of income over the medium term. That is something that local authorities have asked for. It allows them to think strategically. Indeed, in the hon. Gentleman’s area the Nottingham Open Space Forum, of which I know he is aware, is one such example of that longer term strategic thinking, and it highlights the point that local areas are best placed to decide how to use resources to promote the causes that their constituents care most about.
Melanie Onn
Is the Minister aware of the inquiry by the previous Communities and Local Government Committee, which I was part of? The public response in that inquiry was overwhelming—one of the biggest the Committee received for any inquiry it had undertaken. Is that a sign that parks should be much higher up the Government’s agenda?
Rishi Sunak
I thank the hon. Lady for her work on that Committee. I read that report when I first got this job a few weeks ago. It was a very good report, and I hope that she is pleased to see that the Government responded very positively to its recommendations, through my predecessor, my hon. Friend the Member for Nuneaton (Mr Jones). I shall come on to those shortly, especially with regard to the parks action group and how we take forward the work recommended in the report.
The hon. Member for Nottingham East spoke a lot about children’s needs, and he is absolutely right to do so. There is more to do on tackling rising obesity levels and mental illness among our young people, but I am pleased that a great deal of activity is going on across Government in this area. We all want our children to be healthy and active, no matter their background, which is why it is important that we focus as a priority on what is happening in schools.
Having spoken to colleagues in the Department for Education, I am delighted to tell the Chamber that funding for the primary school PE and sport premium has doubled to £320 million a year from 2017. That will be a huge help in enabling schools to drive further improvements to sport provision. Furthermore, an extra £100 million has been promised to schools through the healthy pupils capital fund, which is a one-off fund provided from the soft drinks industry levy. That money will go to improving playgrounds and sports facilities across the school estate. Last week the Department for Education also announced the allocation of almost £1.5 billion in the forthcoming financial year to maintain and improve the condition of the education estate, including outdoor spaces.
As the hon. Gentleman noted, however, this is about much more than just funding. By making physical education a compulsory subject at all four key stages in the new national curriculum, the Government are helping to prioritise exercise and wellbeing. The positive experience of sport at a young age can create a lifelong habit of participation. It is important to foster that in young children. It is also important for our children to have role models whom they can look up to and who can inspire them to get fit and keep active. Darcy Bussell has spoken about that recently, and my constituent Sir Ian Botham has been a long-time advocate of children’s exercise, health and fitness.
The hon. Gentleman made the important point that there should be a voice for the parks and green spaces sector, a dedicated national voice to champion and advocate for it. He is aware of the parks action group established by my predecessor last year, and I would like to think that it is exactly that voice that the hon. Gentleman has called for. One of the points that I will take away from today is that we might need to shout a little louder about the important work of the parks action group. As the hon. Member for Great Grimsby (Melanie Onn) knows, that is one of the Select Committee recommendations that the Government acted on swiftly.
The action group draws on the expertise of a range of partners from the parks sector and a range of Departments. I will list some of those involved: the Association for Public Service Excellence, the Parks Alliance, Fields in Trust, the National Federation of Parks and Green Spaces, Keep Britain Tidy, Natural England, Groundwork, the National Trust, the Heritage Lottery Fund and bodies representing local and parish councils. I list them because I am especially pleased that such a wide range of organisations have committed their time and energy to work in partnership with the Government to raise the profile of the parks agenda.
I say to hon. Members present that I do not intend for the parks action group just to be a talking shop. It aims not only to take forward the recommendations of the Communities and Local Government Committee report from last year but to deal with wider issues facing the parks sector. The members represent the views of the local communities with whom they work and, through their contribution, we will ensure that all the issues that have surfaced today and many others are properly raised, represented and actioned.
The group will in the first instance identify effective and deliverable activities that can be undertaken to secure a better future for our green spaces for generations to come. It will focus on six immediate priorities for parks: standards, funding, vision and value of parks, empowering communities, knowledge and skills, and increasing usage. Those priorities pick up a number of the very pertinent points made by the hon. Gentleman.
Mr Leslie
I am very interested to hear about the action group, which is an important organisation, but I must emphasise again play and playgrounds—the need for structured physical facilities within the parks. If the Minister can ensure that that is part and parcel of one of those six objectives, I would feel a lot happier.
Rishi Sunak
I can absolutely give the hon. Gentleman that reassurance. I was about to come on to that, but he is right to raise it. I will ensure that a transcript of the debate, including his particular point about playgrounds and play, is given to all the members of the parks action group so that that is uppermost in their minds as they develop their work.
The action group will also explore how to improve equality of access across all ages and social groups. We all recognise that parks can play an important role in strengthening community cohesion, combating loneliness —my hon. Friend the Member for Henley (John Howell) made an important point there—and promoting integration between diverse groups. The hon. Member for Nottingham East made reference to the integrated communities strategy published last week, and that highlights how the use of shared areas, especially by young people, helps to bring communities and neighbourhoods together. As a Department, we will welcome views on the proposals in that Green Paper and we will engage with individuals, communities, businesses and faith groups to help deliver those specific proposals.
With regard to loneliness, as mentioned by my hon. Friend the Member for Henley, I am a member of the Jo Cox Commission on Loneliness, which was set up in memory of Jo. The Prime Minister has championed this as a priority for her—there was a meeting only last week, in which we talked about the value of green spaces in combatting loneliness and about ensuring that open spaces feature heavily in the commission’s strategy.
The parks action group will also consider the various funding models that exist to support parks and green spaces, and it will share that information with the sector to support future sustainability. There are examples of innovation, particularly up in Newcastle and the north-east, which I am keen to visit reasonably soon to explore what is being done. I look forward to presenting an update to Parliament on the progress of the parks action group in due course. I encourage all Members to support its work.
Melanie Onn
When is the strategy group due to produce a report? I wonder how the parents of the Sixhills area of Great Grimsby will feel about the outcomes of that and how quickly they will start to see the results in their play area.
Rishi Sunak
The parks action group has met recently, this year, and I am due to attend the next meeting. I cannot give the hon. Lady a specific timeline, but the Government have committed to report regularly to Parliament with updates. I hope we will give an update before the summer recess, but I have not yet had my first meeting so I am loth to make a firm commitment until I know about the work streams and plans of the action group. The Government have funded the group with £500,000, which I hope will leverage in extra funding from the various partners involved to promote the agenda that the group is keen to embrace.
The hon. Member for Nottingham East made another point about social deprivation. He is aware of the pocket parks programme, which the Department has run in the past, where £1 million helped in cases such as the one the hon. Member for Great Grimsby mentioned. The programme helped to fund 87 small green spaces, including two in the constituency of the hon. Member for Nottingham East, such as Frinton pocket park. That was a fantastic programme and I am looking to see what lessons we can learn from it, such as whether there is the possibility of replicating something similar in the future. It was brilliant at targeting money on areas with high social deprivation, removing those barriers to access.
I am conscious of time, but I hope that in the debate I have been able to demonstrate to the Chamber that the Government—not least me—are taking the subject seriously. With the parks action group, work is happening. The hon. Gentleman was absolutely right to put the issues front and forward on the agenda. I look forward to working with him and other Members to develop the green spaces that we all want our children to enjoy, not just today but for years to come.
Question put and agreed to.
Draft Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) Regulations 2018
Rishi Sunak Excerpts(8 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I beg to move,
That the Committee has considered the draft Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Hosie, and to be in these grand surroundings, as befits this grand topic. The regulations make amendments to the administration of the business rates retention system. The scheme, which was introduced with effect from 1 April 2013, allows local government to keep a percentage of the business rates they collect from local ratepayers. Initially, local government’s share was set at 50%, but in 2017-18, 27 local authorities in five areas—Cornwall, Greater Manchester, Liverpool City region, West Midlands and the West of England—were allowed to keep all the business rates they raised. In addition, the Greater London Authority’s share of business rates was increased from 20% to 37%.
In June of last year, the Government gave every other local authority in England the opportunity to become a 100% business-rates pilot. So popular did that invitation prove that 212 authorities in 26 different areas applied to become 100% pilots in 2018-19, which reflected the desire of local authorities to take more control of the local tax base and to potentially secure additional income by keeping all the benefits of local growth. In the event, we were able to extend 100% rates retention to a further 122 authorities in 11 areas—Berkshire, Derbyshire, Devon, Gloucestershire, Kent, Leeds, Lincolnshire, London, Solent, Suffolk and Surrey. Taken together with the original pilots and based on their own estimates, authorities might have as much as £700 million more income in 2018-19 as a result of keeping 100% of their business rates growth.
The regulations give administrative effect to the new 100% pilots and make two other principal changes. First, they make changes to each authority’s tariff or top-up as a consequence of the 2017 revaluation. Tariffs and top-ups are the means by which we redistribute business rates income between richer and poorer authorities under the local government finance system. They were originally set in 2013-14 and since then have only been uprated by inflation. However, in 2017-18, local authorities’ income from business rates changed, not because of any growth in the underlying rates base, but as a result of the business rates revaluation. In last year’s settlement, we adjusted the tariffs and top-ups to strip out the impact of the revaluation, but we said at the time that we would revisit and revise the adjustments in the 2018-19 settlement to reflect updated data.
Revised tariffs and top-ups based on the updated data were approved by the House as part of this year’s local government finance settlement and in 2018-19, authorities will pay or receive the tariffs and top-ups set out in the local government finance report for 2018-19. Those tariffs and top-ups also need to be used in the administration of other parts of the rates retention system, principally in the calculation of the levy and safety net payments. The regulations therefore ensure that levy and safety net calculations are made using the revised values for tariffs and top-ups for last year and the forthcoming year.
Finally, the regulations make changes to the time period for which local authorities will be compensated by the Government for the relief they give businesses in enterprise zones. I am sure Members of the Committee know that, under the rates retention system, authorities are entitled to keep all of the growth in business rates in enterprise zones. There are more than 200 separate zones in more than 100 local authorities. As part of their efforts to regenerate zones, authorities are able to give business rates relief to new businesses relocating there. The Government then compensate local authorities for the relief they give, by allowing them to deduct the cost of the relief from the payments they make to central Government under the rates retention scheme.
The first enterprise zones created in 2013 were entitled to compensation for the relief they gave for up to five years, until 31 March 2018. That period, set out in the rates retention regulations, has not changed since, despite the fact that that we have set up new enterprise zones in 2014, 2015, 2016 and 2017. In order to ensure that all of these later enterprise zones can also receive compensation from Government for relief for up to five years, the regulations now tie the period for which authorities can receive compensation to the specific date on which the enterprise zone came into being. This puts all enterprise zones in the same position, regardless of when they were created.
Before concluding, I would like to bring to the Committee’s attention a written ministerial statement made earlier today that relates to a historic error identified in the methodology used to calculate the sums due to 100% business rates retention pilots. The written ministerial statement details the steps taken to address this error. Given that this is not the direct subject of today’s debate I will not go into further detail as it would not be appropriate, but I wanted to flag this up to the Committee and I am happy to answer any questions.
The regulations before the Committee make technical changes to the regulations governing the administration of the business rates retention system to ensure that the scheme works properly following the revaluation to allow new 100% rates retention pilots to operate from 1 April 2018, and to ensure parity of treatment between all enterprise zones. I commend the regulations to the Committee.
Rishi Sunak
I thank the hon. Member for Oldham West and Royton. He made some thoughtful comments, as is his wont, which I appreciate. I will try to address his points quickly.
The hon. Gentleman talked about the future for local government, with regard to rates retention, and local government’s desire for more of the income that is generated locally to be kept locally, and to be more in control of its own destiny. As he knows, the Government are committed to introducing 75% rates retention for the entire country by 2021. As part of that process, many of the questions he asked are being addressed.
The hon. Gentleman asked about redistribution among authorities. Of course, some local authorities will have a greater capacity to generate business rates income. That is true today and it will be true in the future, so the new system will ensure some redistribution. The Government are clear that that will remain a feature of the system. What the best way of doing that is needs to be worked out within the sector.
The hon. Gentleman said that local authorities that are trying hard but are not able to generate growth should not be penalised. The new system will have a reset period. A balance needs to be struck: the period should give local authorities enough of an incentive to drive growth and enjoy the benefits of it, but the gap between the various authorities should not grow too wide. The reset period and the mechanism for redistribution are important features of the new system about which Government are currently consulting with the sector and stakeholders. I welcome the hon. Gentleman’s thoughts on those issues.
The hon. Gentleman asked about the assessment of the first wave of pilots. That is a very fair question. He will be pleased to know that the Department has been conducting extensive questionnaires and meetings with the first wave of pilots from last year. From memory, I think those surveys were completed in November last year—it possibly stretched into December. The early results of the surveys have already been shared with the LGA, and some elements of that will be brought into the public domain shortly.
The hon. Gentleman asked about the no detriment clause. For the benefit of other Committee Members, let me explain that the no detriment clause ensures that becoming a pilot makes no one worse off. I assure him that it applies to each and every pilot, not just to those in London.
The hon. Gentleman talked about appeals. As he knows, the Government recently introduced a new appeals process, which we discussed in a similar Committee last week. The new “check, challenge and appeal” process is designed to improve the system to the benefit of local authorities, reducing the burden of speculative appeals and the provisions they need to make. I acknowledge his point that provisioning for such appeals has an impact on local authorities, which is why appeals and provisioning are the subject of a technical working paper, which is being worked on as we speak by a technical working group run by the Department and the LGA. It will figure out how, in the new business rates retention system, some element of socialisation of those appeals can perhaps happen within industry. The sector is keen to see that, and the hon. Gentleman is right to highlight it.
Finally, the hon. Gentleman asked about timing. He made a good point about the fact that the fair funding review and the business rates retention processes are both fundamental reforms of the local government finance system. It is good that they are now on the same timeline and will come in at the same time in 2021. A spending review will happen at the beginning of next year, while these conversations are live. That is helpful, because it enables us to consider funding for local government finance and these two new systems in the round. We will bring those twin-track processes together to ensure that we are all on the same page, and that the systems work properly together.
I hope I have answered all the Committee’s questions. I commend these technical but important regulations to the Committee.
Question put and agreed to.
Draft Non-Domestic Rating (Alteration of Lists and Appeals) (England)(Amendment) Regulations 2018
Rishi Sunak Excerpts(8 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I beg to move,
That the Committee has considered the draft Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Rosindell, in my first Delegated Legislation Committee as a Minister. The draft regulations, which were laid before the House on 21 December, will give the Valuation Office Agency the power to impose a penalty on a person who provides false information knowingly, recklessly or carelessly in the business rates appeals process. They will set the level of such penalties for small and larger businesses and will make provision for ratepayers to appeal to the independent valuation tribunal if they disagree with the imposition of a penalty.
Introducing penalties for the provision of false information is an important part of the wider reforms to the system through which businesses may challenge, and appeal against, the valuation of their property. The Government introduced the majority of those reforms in April 2017; the enabling legislation for the draft regulations was approved by the House in the Enterprise Act 2016. As the Committee may be aware, prior to the changes introduced last year, we had a flawed and inefficient system that caused uncertainty both for businesses and for local government. Appeals were made almost as a matter of routine, whether or not there was a clear case that the valuation was wrong. Encouraged by a no win, no fee agent system, this resulted in large numbers of speculative appeals that were backed with little or no evidence. More than 1 million appeals were made against the 2010 ratings list, covering a huge proportion of the total number of properties liable for rates. A significant number were made with the spurious claim that the rateable value should be just £1, and although 1 million appeals have been made, as of December 2017, 72% had led to no change to the ratings list.
The volume of speculative appeals and the frequent lack of supporting evidence made it extremely difficult for the Valuation Office Agency and the valuation tribunal to prioritise appeals and focus on ratepayers with a valid case. The result was delays for ratepayers due a refund, and significant public resources wasted on dealing with speculative appeals. We are still dealing with the consequences: a large number of appeals to the 2010 list are still outstanding.
The Government are committed to delivering a fair and effective appeals system for business rates that provides an efficient means for ratepayers to challenge the valuation of non-domestic properties. That is why, from April 2017, we introduced the check, challenge, appeal framework, which is being implemented by the Valuation Office Agency and the valuation tribunal for England. The reforms are designed to tackle some of the flaws of the previous framework and deliver a more efficient system that is grounded in early engagement and sharing of evidence. Under the new system, challenges to the list will—quite rightly—need to be backed by clear arguments and supporting evidence. This will support proper engagement with the Valuation Office Agency and, where possible, resolution of cases before they reach the tribunal. Restrictions have been placed on introducing evidence at the tribunal stage that could reasonably have been disclosed earlier to prevent ratepayers from withholding evidence and—as we saw under the old system—attempting last-minute negotiations on the steps of the tribunal. Quite rightly, those restrictions will be subject to a right for ratepayers to bring forward any genuinely new evidence that they could not previously have obtained.
Penalties for false information, which are the subject of the draft regulations, are a key part of our reforms. They will act as an important deterrent to providing false information and will help to maintain the integrity of the appeals process and the wider business rates system. Under the check, challenge, appeal framework, ratepayers are required to provide information to the valuation officer both at the check stage, when underlying facts are confirmed, and throughout the challenge stage, when more detailed evidence may be exchanged. In common with in other parts of our tax system, penalties will be an important mechanism to support the submission of accurate information.
Specifically, the regulations will, if approved and made, give the VOA the power to impose a penalty on a person who provides false information knowingly, recklessly or carelessly. The regulations specify the level of the penalty, which will be £200 for small businesses and £500 for all others. The £500 maximum penalty was specified in the Enterprise Act 2016, which provides the enabling powers for penalties in the business rates appeals system.
A person may, of course, wish to challenge the imposition of a penalty. The regulations therefore also provide a right of appeal. Any person subject to a penalty may, within 28 days of receiving a penalty notice, appeal to the independent valuation tribunal for England. If the tribunal finds in favour of the appellant it will be able to order the valuation officer to refund the penalty. It is clearly important that there is no financial incentive for the valuation officer to impose a penalty. The regulations therefore also require that any sum received by the VOA by way of a penalty must be paid into the Government’s consolidated fund, which will ensure that the VOA does not benefit financially from the imposition of penalties.
As part of the wider consultation on the new appeals system, the Government sought views on the implementation of penalties. More than 280 submissions were received and the Government’s response was published in March 2017. As set out in that response, many stakeholders accepted the need for penalties but expressed concern that they could be imposed where ratepayers had made a genuine mistake. In light of that, the Government’s response confirmed that the VOA would provide clear guidance to support ratepayers in the provision of information and on the application of penalties. The agency has recently assured my Department that that guidance will be available before any penalties are applied. If a ratepayer feels that a penalty has been unfairly imposed, they will, as I have already outlined, have the right of appeal to the independent valuation tribunal. Although it is important that guidance is available and that ratepayers have a right of appeal, the consultation also confirmed the Government’s clear view that ratepayers have a duty to take reasonable care in providing information on their tax affairs.
The Committee will be aware that the wider reforms to the appeals system are not without their critics. In particular, there have been issues with the introduction of the VOA’s new online system and concerns that it is not working effectively or is lacking some key functionality that stakeholders want. On the stability of the current IT system, my understanding is that the portal is fully functional and my Department is not aware of any recent major system issues. On the wider functionality, ensuring that the new system works for ratepayers is critical and, as a Department, we have been extremely clear to the VOA that we expect it to work closely with stakeholders to achieve exactly that. Given this debate’s focus on penalties, I do not propose to go into more detail on those issues. Suffice it to say that the Government remain of the view that the reforms were an important and necessary step towards fixing what was clearly a flawed and inefficient system for all involved.
I hope that the Committee will agree that it is entirely right that the system is supported by appropriate powers to penalise the provision of false information and that such powers are accompanied by appropriate safeguards, such as the right of appeal, to ensure that the system operates fairly and effectively. On that basis, I commend the regulations to the Committee.
Rishi Sunak
From my perspective, this has been a good and helpful debate. I was grateful to receive so many contributions, which, to be honest, I did not expect at 9 o’clock on a Tuesday morning. I shall briefly turn to the various points raised, starting with those of the hon. Member for Oldham West and Royton.
The hon. Gentleman talked about the schedule of fees, which is £200 for smaller businesses and £500 for larger ones. That approach was taken in the first instance for reasons of simplicity. He will know that Her Majesty’s Revenue and Customs’s penalty system is relatively complicated and works on a sliding scale as a percentage of the potentially lost revenue. The decision in this instance was to start with a simple, fixed system. On the £500 maximum penalty, I appreciate his point about that perhaps not being a huge amount for a large company and the Government are committed to reviewing the limits over time. In the short term, as he rightly pointed out, the limits are fixed in primary legislation—in the Enterprise Act 2016.
The hon. Gentleman’s second point was about the VOA’s capacity. In the first instance, I believe it is right for any agencies of the state to ensure that they make the best use of their resources and organise themselves as efficiently as possible for the benefit of all our constituents who work hard to pay the taxes that fund them. That said, the hon. Gentleman is right that with the introduction of a new system the appropriate capacity must be there to deliver the smooth transition we would all like to see. Part of the reason for the reforms to the business rates system is to reduce the volume of speculative appeals. As I mentioned, 70% of appeals under the previous system were denied in the end, so we clearly had the balance wrong. The new system should reduce the burden for things that are, frankly, a waste of time for the VOA and, in time, the benefits of that will come through. In the short term, I assure the hon. Gentleman and the Committee that I will hold the VOA to the strongest possible account for delivery against the targets and will shortly meet the agency’s director to discuss exactly that.
On the hon. Gentlemans third point, NHS trusts are independent of my Department and of the Government in general, as he will be aware. That said, the scale of the challenge he talked about has reached my desk. I am monitoring it and am in discussions about it with the LGA. I think I agree with his broad point that if there are to be large transfers of financial resources between different parts of Government, it is appropriate that that is done through the Government and the normal matter of a spending review, with the priorities being worked out through Parliament rather than through ad hoc decisions of courts. We will keep the matter under review.
On the points raised by my right hon. Friends the Members for Meriden, for Rayleigh and Wickford and for Maldon, as I probably come from one of the most rural constituencies in the country—certainly among those in this room—I am personally aware of the issue with riding schools, spending, as I do, most of my Saturday mornings with my daughters at the Northallerton equestrian centre. I would be delighted to take up the issue directly with the VOA, to ensure that appropriate information flows properly between the various claimants and the VOA and to see whether there is a broader system issue that has not been picked up by the regulations.
Mr Francois
May I take this opportunity to congratulate the Minister on a very polished debut? I knew today was going to be an interesting day when I went down to the Tea Room and found it in darkness—clearly the victim of a Russian cyber-attack. I am grateful that he said he would look into that point with the VOA, but I would like to charge him to do slightly more. When he has done so, will he write to members of the Committee, including the Chair, who obviously has an interest, to let us know whether it is possible to make any progress?
Rishi Sunak
I would be delighted to write to you, Mr Rosindell, and to other members of the Committee on that point. Before I confirm that, however, in the short term, I urge hon. Members to ensure that riding stables in their constituencies appeal to their local authorities for discretionary relief, as I have encouraged my auction marts and riding stables to do. The Chancellor announced a £325 million fund to deal with cases that were not captured by the other reliefs put in place around the time of the revaluation.
Jim McMahon
On the unintended consequences of the revaluation, the Association of Convenience Stores has raised the matter of the introduction of cash machines in convenience stores. When high street banks close in a precinct, village or town centre, so there is no cash machine, and a convenience store steps up to provide one, the turnover of that cash machine goes towards its rateable value. Will the Government look at that as part of their review?
Rishi Sunak
I do not have the full details on that issue, but I would be happy to look into it. As the hon. Gentleman will know, the VOA makes decisions independently of Government, according to its guidelines, so it would be inappropriate for a Minister to interfere on an individual case. On his broader point, however, if the system is not picking something up properly, I would be happy to look at that.
My hon. Friend the Member for Amber Valley talked about the appeals process and how exactly it will work. In the old system, everything automatically turned into an appeal. In the new system, there will be two stages before an appeal—check and challenge—which anybody can avail themselves of. First, the appellant will ensure that the basic details of their business rates valuation are correct. Secondly, they will engage with the VOA to discuss that. Those two stages will hopefully mean that there is less reason to go to a formal appeal—although the appellant will still have the right to do that—which should reduce the incidence of spurious appeals.
I hope that I have covered all the points made by hon. Members and that I have assured the Committee that the Government are providing appropriate safeguards to ensure the fair operation of penalties, particularly through the right of appeal. It is clearly in everyone’s interest to ensure that the appeals system is underpinned by accurate information. I commend the regulations to the Committee.
Question put and agreed to.
Draft Non-Domestic Rating (Alteration of Lists and Appeals) (England)(Amendment) (Regulations) 2018
Rishi Sunak Excerpts(8 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I beg to move,
That the Committee has considered the draft Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Rosindell, in my first Delegated Legislation Committee as a Minister. The draft regulations, which were laid before the House on 21 December, will give the Valuation Office Agency the power to impose a penalty on a person who provides false information knowingly, recklessly or carelessly in the business rates appeals process. They will set the level of such penalties for small and larger businesses and will make provision for ratepayers to appeal to the independent valuation tribunal if they disagree with the imposition of a penalty.
Introducing penalties for the provision of false information is an important part of the wider reforms to the system through which businesses may challenge, and appeal against, the valuation of their property. The Government introduced the majority of those reforms in April 2017; the enabling legislation for the draft regulations was approved by the House in the Enterprise Act 2016. As the Committee may be aware, prior to the changes introduced last year, we had a flawed and inefficient system that caused uncertainty both for businesses and for local government. Appeals were made almost as a matter of routine, whether or not there was a clear case that the valuation was wrong. Encouraged by a no win, no fee agent system, this resulted in large numbers of speculative appeals that were backed with little or no evidence. More than 1 million appeals were made against the 2010 ratings list, covering a huge proportion of the total number of properties liable for rates. A significant number were made with the spurious claim that the rateable value should be just £1, and although 1 million appeals have been made, as of December 2017, 72% had led to no change to the ratings list.
The volume of speculative appeals and the frequent lack of supporting evidence made it extremely difficult for the Valuation Office Agency and the valuation tribunal to prioritise appeals and focus on ratepayers with a valid case. The result was delays for ratepayers due a refund, and significant public resources wasted on dealing with speculative appeals. We are still dealing with the consequences: a large number of appeals to the 2010 list are still outstanding.
The Government are committed to delivering a fair and effective appeals system for business rates that provides an efficient means for ratepayers to challenge the valuation of non-domestic properties. That is why, from April 2017, we introduced the check, challenge, appeal framework, which is being implemented by the Valuation Office Agency and the valuation tribunal for England. The reforms are designed to tackle some of the flaws of the previous framework and deliver a more efficient system that is grounded in early engagement and sharing of evidence. Under the new system, challenges to the list will—quite rightly—need to be backed by clear arguments and supporting evidence. This will support proper engagement with the Valuation Office Agency and, where possible, resolution of cases before they reach the tribunal. Restrictions have been placed on introducing evidence at the tribunal stage that could reasonably have been disclosed earlier to prevent ratepayers from withholding evidence and—as we saw under the old system—attempting last-minute negotiations on the steps of the tribunal. Quite rightly, those restrictions will be subject to a right for ratepayers to bring forward any genuinely new evidence that they could not previously have obtained.
Penalties for false information, which are the subject of the draft regulations, are a key part of our reforms. They will act as an important deterrent to providing false information and will help to maintain the integrity of the appeals process and the wider business rates system. Under the check, challenge, appeal framework, ratepayers are required to provide information to the valuation officer both at the check stage, when underlying facts are confirmed, and throughout the challenge stage, when more detailed evidence may be exchanged. In common with in other parts of our tax system, penalties will be an important mechanism to support the submission of accurate information.
Specifically, the regulations will, if approved and made, give the VOA the power to impose a penalty on a person who provides false information knowingly, recklessly or carelessly. The regulations specify the level of the penalty, which will be £200 for small businesses and £500 for all others. The £500 maximum penalty was specified in the Enterprise Act 2016, which provides the enabling powers for penalties in the business rates appeals system.
A person may, of course, wish to challenge the imposition of a penalty. The regulations therefore also provide a right of appeal. Any person subject to a penalty may, within 28 days of receiving a penalty notice, appeal to the independent valuation tribunal for England. If the tribunal finds in favour of the appellant it will be able to order the valuation officer to refund the penalty. It is clearly important that there is no financial incentive for the valuation officer to impose a penalty. The regulations therefore also require that any sum received by the VOA by way of a penalty must be paid into the Government’s consolidated fund, which will ensure that the VOA does not benefit financially from the imposition of penalties.
As part of the wider consultation on the new appeals system, the Government sought views on the implementation of penalties. More than 280 submissions were received and the Government’s response was published in March 2017. As set out in that response, many stakeholders accepted the need for penalties but expressed concern that they could be imposed where ratepayers had made a genuine mistake. In light of that, the Government’s response confirmed that the VOA would provide clear guidance to support ratepayers in the provision of information and on the application of penalties. The agency has recently assured my Department that that guidance will be available before any penalties are applied. If a ratepayer feels that a penalty has been unfairly imposed, they will, as I have already outlined, have the right of appeal to the independent valuation tribunal. Although it is important that guidance is available and that ratepayers have a right of appeal, the consultation also confirmed the Government’s clear view that ratepayers have a duty to take reasonable care in providing information on their tax affairs.
The Committee will be aware that the wider reforms to the appeals system are not without their critics. In particular, there have been issues with the introduction of the VOA’s new online system and concerns that it is not working effectively or is lacking some key functionality that stakeholders want. On the stability of the current IT system, my understanding is that the portal is fully functional and my Department is not aware of any recent major system issues. On the wider functionality, ensuring that the new system works for ratepayers is critical and, as a Department, we have been extremely clear to the VOA that we expect it to work closely with stakeholders to achieve exactly that. Given this debate’s focus on penalties, I do not propose to go into more detail on those issues. Suffice to say that the Government remain of the view that the reforms were an important and necessary step towards fixing what was clearly a flawed and inefficient system for all involved.
I hope that the Committee will agree that it is entirely right that the system is supported by appropriate powers to penalise the provision of false information and that such powers are accompanied by appropriate safeguards, such as the right of appeal, to ensure that the system operates fairly and effectively. On that basis, I commend the regulations to the Committee.
Rishi Sunak
From my perspective, this has been a good and helpful debate. I was grateful to receive so many contributions which, to be honest, I did not expect at 9 o’clock on a Tuesday morning. I shall briefly turn to the various points raised, starting with those of the hon. Member for Oldham West and Royton.
The hon. Gentleman talked about the schedule of fees, which is £200 for smaller businesses and £500 for larger ones. That approach was taken in the first instance for reasons of simplicity. He will know that HMRC’s penalty system is relatively complicated and works on a sliding scale as a percentage of the potentially lost revenue. The decision in this instance was to start with a simple, fixed system. On the £500 maximum penalty, I appreciate his point about that perhaps not being a huge amount for a large company and the Government are committed to reviewing the limits over time. In the short term, as he rightly pointed out, the limits are fixed in primary legislation—in the Enterprise Act 2016.
His second point was about the VOA’s capacity. In the first instance, I believe it is right for any agencies of the state to ensure that they make the best use of their resources and organise themselves as efficiently as possible for the benefit of all our constituents who work hard to pay the taxes that fund them. That said, the hon. Gentleman is right that with the introduction of a new system the appropriate capacity must be there to deliver the smooth transition we would all like to see. Part of the reason for the reforms to the business rates system is to reduce the volume of speculative appeals. As I mentioned, 70% of appeals under the previous system were denied in the end, so we clearly had the balance wrong. The new system should reduce the amount of burden for things that are, frankly, a waste of time for the VOA and, in time, the benefits of that will come through. In the short term, I assure the hon. Gentleman and the Committee that I will hold the VOA to the strongest possible account for delivery against the targets and will shortly meet the agency’s director to discuss exactly that.
On his third point, NHS trusts are independent of my Department and of the Government in general, as he will be aware. That said, the scale of the challenge he talked about has reached my desk. I am monitoring it and am in discussions about it with the LGA. I think I agree with his broad point that if there are to be large transfers of financial resources between different parts of Government, it is appropriate that that is done through the Government and the normal matter of a spending review, with the priorities being worked out through Parliament rather than through ad hoc decisions of courts. We will keep the matter under review.
On the points raised by my right hon. Friends the Members for Meriden, for Rayleigh and Wickford and for Maldon, as I probably come from one of the most rural constituencies in the country—certainly among those in this room—I am personally aware of the issue with riding schools, spending, as I do, most of my Saturday mornings with my daughters at the Northallerton equestrian centre. I would be delighted to take up the issue directly with the VOA, to ensure that appropriate information flows properly between the various claimants and the VOA and to see whether there is a broader system issue that has not been picked up by the regulations.
Mr Francois
May I take this opportunity to congratulate the Minister on a very polished debut? I knew today was going to be an interesting day when I went down to the Tea Room and found it in darkness—clearly the victim of a Russian cyber-attack. I am grateful that he said he would look into that point with the VOA, but I would like to charge him to do slightly more. When he has done so, will he write to members of the Committee, including the Chair, who obviously has an interest, to let us know whether it is possible to make any progress?
Rishi Sunak
I would be delighted to write to you, Mr Rosindell, and to other members of the Committee on that point. Before I confirm that, however, in the short term, I urge hon. Members to ensure that riding stables in their constituencies appeal to their local authorities for discretionary relief, as I have encouraged my auction marts and riding stables to do. The Chancellor announced a £325 million fund to deal with cases that were not captured by the other reliefs put in place around the time of the revaluation.
Jim McMahon
On the unintended consequences of the revaluation, the Association of Convenience Stores has raised the matter of the introduction of cash machines in convenience stores. When high street banks close in a precinct, village or town centre, so there is no cash machine, and a convenience store steps up to provide one, the turnover of that cash machine goes towards its rateable value. Will the Government look at that as part of their review?
Rishi Sunak
I do not have the full details on that issue, but I would be happy to look into it. As the hon. Gentleman will know, the VOA makes decisions independently of Government, according to its guidelines, so it would be inappropriate for a Minister to interfere on an individual case. On his broader point, however, if the system is not picking something up properly, I would be happy to look at that.
My hon. Friend the Member for Amber Valley talked about the appeals process and how exactly it will work. In the old system, everything automatically turned into an appeal. In the new system, there will be two stages before an appeal—check and challenge—which anybody can avail themselves of. First, the appellant will ensure that the basic details of their business rates valuation are correct. Secondly, they will engage with the VOA to discuss that. Those two stages will hopefully mean that there is less reason to go to a formal appeal—although the appellant will still have the right to do that—which should reduce the incidence of spurious appeals.
I hope that I have covered all the points made by hon. Members and that I have assured the Committee that the Government are providing appropriate safeguards to ensure the fair operation of penalties, particularly through the right of appeal. It is clearly in everyone’s interest to ensure that the appeals system is underpinned by accurate information. I commend the regulations to the Committee.
Question put and agreed to.
Oral Answers to Questions
Rishi Sunak Excerpts(8 years ago)
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Tracy Brabin (Batley and Spen) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
In addition to the spending review package, the Government provided a further £2 billion for adult social care at last year’s Budget and an additional £150 million in the most recent local government finance settlement. As a result, councils will be able to increase spending on adult social care in real terms each year until 2020.
Tracy Brabin
Kirklees Council spends 35% of its budget on adult social care. It has just raised its council tax by 6%, and half of that is ring-fenced to fund social care, but the council will still have to cut tens of millions in the years ahead. So, ahead of tomorrow’s spring statement, will the Minister tell us what he has done to secure more funding from the Treasury for social care to alleviate the pressure on councils such as Kirklees?
Rishi Sunak
In the most recent local government finance settlement, the Secretary of State listened to councils’ concerns and increased funding for adult social care by £150 million, with £26 million for Kirklees Council in particular. I recently met the Key Cities group, of which Kirklees is a member, to discuss its ideas for reforming the funding formula so as to adequately reflect the pressures faced by councils such as Kirklees.
Mr Mark Prisk (Hertford and Stortford) (Con)
When the then Communities and Local Government Committee adopted the Bill introduced by my hon. Friend the Member for Harrow East (Bob Blackman) that became the Homelessness Reduction Act 2017, Ministers, to their credit, engaged really positively to make that Bill work. May I urge the Minister to be just as positive about the planned joint Committee inquiry into the funding of adult care? Indeed, Front Benchers on both sides of the House will need to engage with that process if we are to have a long-term answer.
Rishi Sunak
I wholeheartedly agree with my hon. Friend. As he knows, the Government are committed to publishing a Green Paper on adult social care this summer. Alongside that, there is a workstream on working-age adult social care to which I am sure that he will be keen to contribute.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
Rishi Sunak
I agree with the hon. Lady that this is a challenge facing our country, and it is important that we get this right and put social care on a sustainable footing, not just for this year but for the years to come. That is exactly why the Government are committed to the Green Paper and to tackling this problem, and she should look forward to seeing the Green Paper’s contents this summer.
Yvonne Fovargue (Makerfield) (Lab)
The Minister referred to the local government finance settlement, but this year’s settlement still means a cut of £177 million for adult social care compared with last year. Given that the National Audit Office’s report states that more and more councils are only just managing to balance their books by using their reserves to cover overspends on social care services, how does the Minister suggest that councils can avoid declaring themselves effectively bankrupt, as Northamptonshire County Council did last month, as in many cases their reserves will be gone by 2020?
Rishi Sunak
I simply do not recognise those figures. The Government have increased funding for adult social care. Over these three years, £9.4 billion has been allocated for adult social care funding, with £150 million more at the last local government finance settlement. This Government are listening to councils and delivering extra resources to help them.
Helen Jones (Warrington North) (Lab)
The Local Government Finance Act 2012 divorced local government funding from any assessment of need. The Government’s insistence that the problem can be solved by councils raising precepts is simply wrong, because councils in wealthier areas, which have more properties in the higher bands, can raise more money than those with more properties in the lower bands, which usually have the greatest needs, the greatest levels of long-term disease and so on. When will the Minister understand this and actually start to allocate social services funding on the basis of need?
Rishi Sunak
I can reassure the hon. Lady that the allocation for social care funding does take into account the relative council tax bases of local authorities across the country. That said, I appreciate that the funding formula is out of date and in need of review, which is why we have launched a consultation on reforming it. That consultation closes today, but I would welcome her comments and input into it. We will reform the formula so that it can adequately take account of need, as she suggests.
David Warburton (Somerton and Frome) (Con)
Matt Western (Warwick and Leamington) (Lab)
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
The 2018-19 settlement is the third year of a four-year deal providing funding certainty and is accepted by 97% of councils. The settlement sees a real-terms increase in resources to local government over the next two years, totalling £45.1 billion in the forthcoming financial year.
Diana Johnson
Hull is the third most deprived local authority in the country. Two thirds more Hull residents require social care compared with the national average. We have lost half our Government funding since 2010 and we will be getting the lowest amount per head from the social care precept of any Yorkshire and Humber council. With the Government having got it so wrong so far, will the Minister guarantee that Hull will now get a fair funding settlement?
Rishi Sunak
The hon. Lady makes some comments about funding for deprived areas. She will be pleased to know that funding per household in her particular area is higher than the average for unitary authorities across the country and that in general the most deprived local authorities have funding per household that is 23% higher than the most well-off. On her point, I can reassure her that we are committed to introducing a new fair funding formula and I look forward to hearing the responses from her council as we develop it.
Matt Western
In a letter to the Secretary of State last month, the Conservative leader of Warwickshire County Council stated that in the council’s view the current funding model for local government is unsustainable. Is she correct?
Rishi Sunak
I appreciate that the hon. Gentleman makes a point about the funding settlement and the formula. He will know from his membership of the Select Committee, which I have just had the pleasure to appear before, that we are looking very hard at the structure of local government financing, both increasing the amount of business rates retentions to 75% and introducing a new needs-based formula that takes into account updated needs and resources. I know his Committee will play a huge part in making sure that we get that right for Warwickshire and for the country.
Mr Gary Streeter (South West Devon) (Con)
Over the years, I have strongly supported the pressure we have rightly put local authorities under to improve efficiency and bear down on waste, and I am sure that elsewhere in the country there are examples of where more needs to be done. In the south-west, however, my impression is that the finances of Devon, Plymouth and many other local authorities have been cut to the bone. I think there is an opportunity for the Government to be more generous with efficient local authorities in the south-west to enable them to make sure their priorities are delivered.
Rishi Sunak
I pay tribute to the work of local government across the country. Local authorities have done a commendable job over the past few years of delivering high quality services in a difficult financial climate. I thank them, as I know their constituents do. On my hon. Friend’s point, I look forward to the representations from Devon and the south-west as we reform local government financing through the fair funding formula which is coming soon.
Mr David Lammy (Tottenham) (Lab)
Rishi Sunak
The Department is in discussions with multiple local authorities on the requirements to improve the safety of buildings. My understanding is that the Department has not said no to any local authority thus far that is seeking flexibility with those plans.
Ruth George (High Peak) (Lab)
My own council in Derbyshire has seen £180 million—over half of its budget—cut in the past seven years. It cannot now offer enough money for social care packages for terminally ill people to receive care in their own home. They are being forced to die in hospital away from their loved ones. What will the Minister do to make sure that councils receive the proper funding that they need to be able to free up hospital beds and support families in the most urgent need?
Rishi Sunak
As we have been discussing, the Government have put extra financial resources into social care. It is pleasing to see that over the past year, delayed transfers of care across England attributable to social care have fallen by 34%, showing that the resources we are putting in are making a difference on the ground.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Since 2010, Hull City Council has been forced to cut its children’s services budget by £37.2 million, which means that it has not had the money that it has needed for early intervention support for families. It is no surprise that the number of looked-after children in Hull has increased by 140—that is 140 children’s lives changed forever. Will the Minister please give authorities such as Hull City Council more money, so that they can give those families support when they need it, before they enter crisis?
Rishi Sunak
The hon. Lady is absolutely right to highlight the important work that prevention plays. Nobody wants to see a child in need in those circumstances, which is why this Government have committed almost £1 billion to the troubled families programme over this period in the spending review. As recent results have shown, that is reducing the number of children in need after heavy intervention from their key workers in the programme.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
Last week, the respected National Audit Office published its report on the financial sustainability of local authorities. It made clear the significant challenges faced by councils and the vital services that they deliver. Can the Secretary of State prove that he is on the side of local councils and place in the House of Commons Library any submissions that he has made to the Chancellor ahead of the spring statement?
Rishi Sunak
I also read the National Audit Office report with interest. I was pleased to see that it made very positive comments about the Department’s work in getting to grips with the challenges across local government and making sure that the sector is properly resourced and looks forward to the reviews that are being put in place to improve funding and business rates retention.
Clive Efford (Eltham) (Lab)
Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
Over the spending review period, councils will receive more than £200 billion to deliver local services. This money is largely not ring-fenced, so local authorities can prioritise where they see fit, including for their statutory duties relating to children in care.
Ged Killen
With the education disparity between looked-after and non-looked-after children being so wide, what more does the Minister believe local authorities can do to bridge the gap?
Rishi Sunak
The hon. Gentleman raises a good point about the outcomes for children in care. The Government are consulting and are shortly to introduce the care leavers covenant, which will look to support companies, charities and local government to bring care leavers into employment after they leave care, and we are strengthening corporate parenting provisions under the Children and Social Work Act 2017.
Chris Ruane (Vale of Clwyd) (Lab)
Alex Burghart (Brentwood and Ongar) (Con)
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I know that my hon. Friend has a long history of being interested in this programme. He will be pleased to know that the evaluation reports published in December showed promising progress, particularly with regard to children in need. Further findings will be published in the annual report, and I look forward to discussing them at length with my hon. Friend then.
Marsha De Cordova (Battersea) (Lab)
Steve Double (St Austell and Newquay) (Con)
Councils in rural areas have received a raw deal on local government funding for many, many years, even though the cost of delivering services in rural areas is often significantly higher. Will the Minister assure me that in the local government finance review the true cost of delivering services will be considered and that rural areas get a fair deal?
Rishi Sunak
I know that my hon. Friend is a doughty champion of rural areas. I am delighted to tell him that his point will be exactly considered in the fair funding formula. I am sure that he will be heartened by the local government finance settlement, where we increase rural services delivery grant to its highest ever level.
Several hon. Members rose—
City of London Corporation: Pensions
Rishi Sunak Excerpts(8 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I congratulate the hon. Member for Vauxhall (Kate Hoey) on securing this debate. I had the pleasure of fighting alongside her in the referendum campaign, and I can see that she has for many years applied the same tireless and tenacious campaigning instincts to this case on behalf of her constituent, and I commend her for those efforts. I particularly welcome the chance to respond to the points that she has made and, indeed, I share her regret that we have had to debate this on the Floor of the House.
Pensions are not just about regulations and procedures; they are about security and peace of mind. We all want to retire on a decent income, and as we live longer and healthier lives, we want to be able to save more and make the most of our retirement. Public sector schemes such as the local government pension scheme include insurance-style benefits that help to cushion us against the most unfortunate events. There are protections when staff are made redundant, and provision for their dependants if they die in service, as well as ill-health benefits such as those at issue in this debate.
Throughout the past 100 years, the LGPS developed as a national scheme to become a valuable and integral part of local government, valued by millions. That said, as the recently ensconced Minister responsible for local government pensions, I can attest that it is not a simple scheme. Some of that complexity comes from the need to cover a wide range of possible scenarios. The provisions dealing with injuries at work—such as those suffered by Mr Bell—will interact with statutory schemes of compensation, employers’ sickness procedures and employment law. Injuries can lead to periods of sickness and to permanent or temporary incapacity. Justice comes from treating like cases alike, but also from making fine judgments and distinctions between cases where appropriate. I want the best possible administration of the scheme. It has been a key aim of the Government to improve transparency and accountability in decision making by such public bodies.
The LGPS is a national scheme set out in regulations, but it is important to note that it is administered locally. That has been a long-standing feature of the scheme, and often one of its strengths. As the hon. Lady will know, local authorities are independent bodies and, first and foremost, they are accountable to their electorates through the ballot box, rather than to central Government. That said, there are routes for independent redress where local authorities fail in their obligations—for example, through the council’s complaints procedure, the local government ombudsman or, when appropriate, the pensions ombudsman. Potentially, and finally, the case can be considered by the courts by judicial review.
It is a feature of any legal system of redress that administrative deadlines and statutes of limitation are associated with each of those, and I am sure the hon. Lady will recognise that all sides in a dispute often benefit from the certainty and closure that those afford. I also believe, however, that if local authorities are to retain the trust of the people they serve, they should always seek to act honourably and correct mistakes, even if they are under no legal obligation to do so. Where I feel a need to call out mistakes, I will do so, from the Dispatch Box if necessary. I hope that my voice in these matters will not be without some moral force.
It gives me comfort that in general the LGPS is well-administered, and the vast majority of complaints received about it are resolved internally. It pays out £9.5 billion in benefits each year, and despite that I am told that there were fewer than 91 complaints to the pensions ombudsman, and of those, fewer than 15% were upheld. Clearly some mistakes will be made, and the impact of those mistakes could be hugely significant for vulnerable people or those of limited means who rely on their pension to sustain their dignity and standard of living in old age.
Let me turn to the details of Mr Bell’s case. The hon. Lady forcefully made her case that the City of London has not complied with its statutory obligations or delivered justice to Mr Bell. As she would expect, my officials have been in touch with the City of London to hear their explanation of events.
It is worth stressing at the outset the obvious difficulty of understanding in precise detail events that happened almost 20 years ago. However, from hearing both sides, it strikes me as common ground that as a consequence of the accident on 6 November 2000, Mr Bell suffered some degree of incapacity. The question appears to be about the degree of severity and the permanence of that incapacity. I expect it is difficult for any medical expert to give a very definite answer to those questions. It is for that very reason that I would expect this to be settled as a question of fact by someone that both parties can have confidence in. That is the plain meaning and intent of regulation 97.
I can see no good reason why the City of London Corporation chose not to instruct an independent registered medical practitioner who could have either confirmed or corrected the judgment that was reached, no doubt in good faith, by the corporation’s occupational health team. Not only was an IRMP not instructed, other consequences followed the failure to consider that a decision of any kind was due in respect of Mr Bell’s application for ill-health retirement. The protections and regulations 98 to 102, whereby a member is informed of his rights of appeal and a reference to the Pensions Advisory Service, appear also not to have kicked in as one might reasonably have expected.
Of course, I cannot say what conclusions the IRMP would have reached, or whether indeed an appeal would have been successful. What I can say is that Mr Bell does seem to have suffered an injustice by being denied an independent assessment of this case. However, I must note that Mr Bell did receive legal advice from a reputable firm of lawyers in settling the terms of his dismissal, for limited efficiency, in 2002. In coming to a decision on how best to pursue his case and whether to accept those terms of settlement, I would hope that the advice he received was complete and accurate.
Let me now address directly the questions the hon. Lady put to me in her closing. First, I am very happy to place on record my concern that the regulations do not seem to have been followed in this case. My clear view is that on the facts available to me at this time an IRMP ought to have been engaged in 2002. If the hon. Lady believes it may serve some purpose, I would be very happy to write formally to the corporation and ask it to justify this omission to me.
On the hon. Lady’s other questions more generally, I personally am not aware and the Department is not aware of any other such cases where this practice was followed, nor of any other specific complaints about the corporation’s administration practices. I would hope that if there were cases similar to Mr Bell’s, they would have found their way, correctly and appropriately, to the pensions ombudsman. There, I believe, the arguments advanced would have received a strong hearing.
The hon. Lady asked if I wish to tighten the rules in this area. Having reviewed it, to my mind the regulations then, as now, are clear about the process to be followed. The regulations then, as now, place the correct emphasis on the need for decisions to be taken in a timely way, based on independent advice and with further avenues for advice or appeal clearly signposted. Having reflected on it, the issue at stake here is not that the regulations themselves were at fault, but whether they were properly adhered to and followed. If they were not, however, then at this point, sadly, I cannot see any specific further steps I can take to pursue this case on behalf of the hon. Lady and Mr Bell.
If we were having this conversation at the time of the incident in question, Mr Bell would have had the avenue of appeal and redress through the council’s own two-stage appeal process. Following that, we could have gone to the pensions ombudsman, the Secretary of State or the courts through judicial review. As I said earlier, however, there are good and necessary reasons why we have time limits and limitations in the determination of rights and liabilities. Statutes of limitation are common across civil and criminal law in this country and across the world. Parties must be allowed to know when a matter has finally been settled. Given where we are now, 18 years after the incident in question, unfortunately the ability to access any of those avenues has obviously expired.
At the time, Mr Bell did receive legal advice and sought a settlement with his employers. I very much hope that his solicitors at the time discussed with him these various avenues that may well still have been available at that time and provided advice to him on the best course of action. It may well be worth Mr Bell or the hon. Lady discussing the matter again with the solicitors to make sure that all the correct procedures and avenues were explored. Owing to the separation of powers between central and local government, I cannot intervene in the day-to-day activities of local authorities, except where specific provision is made by Parliament, and I am not aware of any specific basis on which I could intervene directly in this case.
Kate Hoey
I thank the Minister for giving way—I know he is coming to the end of his speech—and for his thoughtful response. Does he accept that it should have been up to the City of London Corporation, a council hugely rich in personnel, to inform Mr Bell of his rights? It should not have been up to a solicitor a few years later. Surely there was a moral duty if not a legal duty—I think there is a legal duty; I think the regulations give a legal duty—to inform him of his rights and to allow that independent medical practitioner. That was where it all went wrong—something so, so simple. Does he agree that there is a moral case in respect of the City of London Corporation? I should add also that I would welcome his writing to it on my and Mr Bell’s behalf.
Rishi Sunak
Not only is there a moral duty; but—the hon. Lady is right—there is a legal duty both to have used an independent medical practitioner and to have informed Mr Bell of his rights at the time. Mr Bell would, I hope, have been aware of those rights through many of the other communications he would have received as a member of the scheme, but at the point when it became relevant, under articles and provisions 98 to 102, he should have been made aware of them again. It will be of limited comfort to Mr Bell and the hon. Lady, but the pension scheme’s statutory advisory board is currently reviewing the means of resolving disputes locally and looking at simplifying the rules around ill-health retirement. I expect recommendations from the board in due course, and obviously this matter will weigh on my mind as I review those recommendations.
In conclusion, though we have discussed process, I do not want to lose sight of the individual at the centre of this, Mr Bell. The accident that caused him to lose his job seems such a small and random piece of bad luck. That we are still talking about it today shows how unfairness of any kind—of fate or in administration—can be very hard to accept and live with. I do not know whether he is adequately supported today and leading a fulfilling and satisfying life, but I sincerely hope that he is. I commend the hon. Lady again for her tireless work in advocating so forcefully on behalf of her constituent. I know that she will keep pushing the City of London Corporation to examine afresh whether it acted fairly and in good conscience, and I will support her in those efforts. I wish her and Mr Bell every success as she pursues this case.
Question put and agreed to.
Local Government Finance
Rishi Sunak Excerpts(8 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
It is a pleasure to close this debate. I thank hon. Members on both sides of the House for their valuable contributions. I pay particular tribute to all Members who are either former or serving members of local authorities and have brought that expertise to bear today. I pay a special tribute to my predecessor, my hon. Friend the Member for Nuneaton (Mr Jones), who has left impressively large shoes for me to fill.
Local government and the hard-working, dedicated people who work in it deliver vital services every day at the heart of the communities they serve. I am deeply honoured to represent them in government—to listen to them, learn from them, and work with them to build communities that people are proud to live in. I am therefore delighted that this settlement delivers on our promise to local government. It confirms the third year of an unprecedented four-year deal accepted by 97% of councils, providing long-term certainty to local government. It is a deal that delivers more than £200 billion over a five-year period, allowing councils to be bold and ambitious in planning for the future.
But there is no room for complacency. This Government are under no illusions about the pressure on local services, so today’s settlement seeks to ease that pressure while shielding taxpayers from unaffordable bills. We have gone above and beyond the four-year deal to listen and respond to what the sector wants.
Imran Hussain
On a point of order, Mr Deputy Speaker. I apologise to the Minister, but I have been advised that I must raise this point of order immediately. When I took part in the debate earlier, I should have put on the record and referred Members to my registered interest as a serving local councillor.
Rishi Sunak
Thank you, Madam Deputy Speaker. [Laughter.] I am sorry—Mr Deputy Speaker.
Rishi Sunak
We have gone above and beyond the four-year deal in listening and responding to what the sector wants. That is why last year we allowed increased flexibility in the use of the adult social care precept, and why this year we have proposed additional flexibility on the core council tax referendum principle.
On adult social care, of which we have heard much today, on top of the extra £2 billion announced at the spring Budget last year, we have now announced an additional £150 million extension to the adult social care support grant, and we have increased the rural services delivery grant to its highest-ever level.
We are also building on the highly popular business rates retention scheme. Local authorities estimate that in the year just finishing they will keep about £1.3 billion in business rates growth, and we expect this to be maintained going forward.
Steve Double (St Austell and Newquay) (Con)
The Minister knows that I have raised a number of times the issue of people avoiding paying both council tax and business rates on holiday homes by converting them to business use and enjoying small business rate relief. Councils in tourist areas are losing out from that. Will he commit to trying to close that loophole?
Rishi Sunak
I thank my hon. Friend for his intervention. He rightly points out that he raised this issue in Prime Minister’s Question Time earlier and has made representations to me about it. I am pleased to confirm that my officials and I are looking into the matter. He makes the point well. The existing system does leave some scope for ambiguity, and we will look into that.
The vital funding that comes from business rates retention—over £1 billion—is a direct result of local authorities driving economic growth in their areas, and it is on top of the core settlement funding that we have announced today. Over the long term, local government will be transformed, becoming increasingly self-sufficient with local resources funding local services. But to achieve that, we all know that the funding formula needs to become fairer, more transparent and more responsive to changing demands. Getting it right will of course be a challenge, but the prize if we can do that is a system that will be truly fit for the modern world and allow councils to face the future with confidence.
The business rates retention proposals that we mentioned earlier are a key step in this journey, and we hope to see local authorities retaining 75% of business rates from 2020-21. There is a great deal of enthusiasm across the country for this new model, and I can assure the House that I and my Department are committed to working with the sector to make this a success.
I turn briefly to some of the specific points that have been made. The hon. Member for Sheffield South East (Mr Betts) and my hon. Friend the Member for North Dorset (Simon Hoare) were right to pay tribute to local councillors who have, we acknowledge, made difficult decisions and have done an extraordinary job over the past few years. My hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski), for North Dorset, for Waveney (Peter Aldous), for Redditch (Rachel Maclean) and for Ludlow (Mr Dunne) talked about rural areas and the need for fair funding. I can assure them that we are committed to that. The fair funding review will specifically take a fresh look at how council tax should be taken into account when redistributing income, and relative costs of delivering services will also be considered.
My hon. Friends the Members for Corby (Tom Pursglove) and for Wellingborough (Mr Bone) rightly talked about the role of governance and leadership in local councils. They were followed by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), who rightly said that it is not just about how much, but how it is spent. Unaccompanied asylum seekers and the costs that councils have to bear were raised by my hon. Friend the Member for Corby and the hon. Member for Dover (Charlie Elphicke). I am pleased to announce that the Government have allocated funding from a £29 million pot for exactly that. My hon. Friend the Member for Corby will be pleased to know that Northamptonshire will receive £231,000 from that grant, and the hon. Member for Dover will know that Kent will receive more than £1 million.
Opposition Members talked a lot about whether the funding was fair. They pointed to Knowsley, so they will be pleased to learn that it receives core spending power per dwelling 26% higher than the average. Indeed, across the country, the 10 most deprived local authorities receive core spending power per dwelling 23% higher than the least deprived. We heard a lot from the Opposition about money. Indeed, the hon. Member for Dover put it well: there is no question to which the answer is not more money. We all know where that money has to come from—our hard-working taxpayers. Under the last Labour Government council tax doubled, and that is what we would have to look forward to again.
This is a settlement that honours our commitment to local government—delivering certainty, recognising the challenges and making additional resources available, all while keeping excessive council tax rises in check. It gives councils the resources they need to provide the world-class services that their communities expect and deserve. I commend it to the House.
Question put.
The House proceeded to a Division.
Mr Deputy Speaker (Sir Lindsay Hoyle)
I remind the House that the motion is subject to double-majority voting: of the whole House and of Members representing constituencies in England.
Public Service Delivery: Northamptonshire
Rishi Sunak Excerpts(8 years, 1 month ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Philip Hollobone (Kettering) (Con)
(Urgent Question): To ask the Secretary of State for Housing, Communities and Local Government what are the implications for public service delivery in Northamptonshire of the issuance by Northamptonshire County Council of a section 114 notice.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I thank my hon. Friend for his question on a topic that he and his Northamptonshire parliamentary colleagues have consistently raised on behalf of their constituents.
As Members will be aware, on Friday 2 February, Northamptonshire County Council’s finance director issued a section 114 notice to stop new spending and put in place a process for the council to meet within a specified time to consider the financial situation. It is important to note that a section 114 notice does not automatically mean that existing services will stop. Northamptonshire’s finance director has confirmed that statutory services to safeguard vulnerable people will continue to be delivered and that council staff will continue to be paid.
Local authorities have a legal duty to balance their budget, and section 114 notices are part of the accountability framework that guards against irresponsible financial management. It is for the council to decide what steps it needs to take to balance its budget. I understand that the full council will meet on 22 February to consider the situation.
Local government is, of course, independent of central Government, but, that said, the Government have been aware of concerns about Northamptonshire County Council’s finances and governance for some time, which was why the Secretary of State appointed an inspector to undertake an independent best-value inspection on 9 January. That independent inspection is due to report on 16 March, and as the Secretary of State made clear in the written ministerial statement of 9 January, it would be inappropriate for the Government to comment while the inspection is under way, specifically to avoid prejudicing its outcome. The Government will address the wider issue of funding for local government in tomorrow’s debate on the local government finance settlement.
Issuing a section 114 notice is a serious step. I understand that this development will be causing some concern in my hon. Friend’s constituency and across the county. However, it is also a sign that the council is taking its responsibility seriously. The Secretary of State and I will take a keen interest in the steps that the council takes to resolve these matters and ensure that it continues to deliver for the communities that it serves.
Mr Hollobone
Thank you, Mr Speaker, for granting this urgent question. May I declare an interest as a member of Kettering Borough Council, and may I welcome other Northamptonshire MPs who are also in the Chamber to ask questions?
It gives me no pleasure to say that, with the issue of this section 114 notice, Northamptonshire County Council becomes the worst-run local authority in the country. There are undoubtedly huge pressures on the social care budget, which are exacerbated by Northamptonshire’s fast-growing elderly population. The Government’s fairer funding review is welcome, but will, I am afraid, come too late for Northamptonshire County Council. This whole situation has been exacerbated by poor leadership by the cabinet at the county council, in which all seven Northamptonshire MPs now have no confidence. We echo the concerns of September’s peer review by the Local Government Association, which concluded that financial information is not presented clearly and transparently and that there is not a sensible budget going forward.
What happens if the county council cannot set a legal budget at its meeting later this month? What will happen to services—statutory or otherwise—to do with adult social services, children’s services, schools and highways? The Government have sent in a best-value inspector, which is good, and he is due to report by 16 March. Can—or will—the Secretary of State request of him an urgent interim assessment with some preliminary findings, because I believe that the Government need to be informed?
What is the total debt of the county council? I understand that it owes more than £700 million. Does the section 114 notice have the implication that lending institutions might foreclose on their lending to the authority? Can the Minister assure me that Northamptonshire’s bad situation with delayed discharges from our two local hospitals will not be made worse by this section 114 notice? We have a 10% delayed discharge rate. On any one day, 100 people are waiting in the two hospitals. They have completed their treatment, but because Northamptonshire County Council is not getting them into care homes quickly enough, they are not leaving the hospitals. May I urge the inspector to look at the opaque accountancy in the local government shared services model at the county council, which is where a lot of the problems may lie?
Will the Government prevent the county council from selling its new, very recently opened Angel Square offices? While that could bring in £50 million, it could leave a 25-year rental liability for any successor authorities. Will the Minister make sure that the transfer of the fire service out of the county council to the police commissioner is not held up by the financial crisis at the county council? I do not want the fire service to go down with the local authority.
It is clear that Northamptonshire County Council is in a huge mess. We look to the Government inspector to report quickly, and, in the view of all seven Northamptonshire MPs, the sooner that Lords Commissioners are sent in to sort out this mess, the better.
Rishi Sunak
I thank my hon. Friend for his questions. I know that this is something that he is thinking about deeply on behalf of his constituents. Let me take in turn the points that he raised. With regard to the fire service, he will hopefully be aware that the Home Office is considering that application and will make its decision in due course. On his points about the financial situation, he is right to say that there are a range of issues that were highlighted in both the independent audit reports and the LGA peer review, which, as he rightly pointed out, cited both culture and governance issues at the council.
On the process from here, Ministers do not have direct contact with the inspector—he is rightly independent—so it is not possible to direct him to report earlier. I would point out that the 16 March deadline means that this inspection will conclude in much less time than was allowed for the Tower Hamlets and Rotherham inspections, which, hopefully, should give my hon. Friend some comfort regarding a rapid resolution.
Finally, if the council meeting is not successful, the finance director has the option of issuing a further section 114 notice. However, it is important to note that he, as the statutory official, has the flexibility today and in the future to authorise any payments that he sees fit and for which there is a sensible case, including, as he has guaranteed, to safeguard vulnerable people. At the point at which the council is ready to make formal representations to my Department for anything that it might require, we stand ready to engage with it.
Andrew Gwynne (Denton and Reddish) (Lab)
Mr Speaker, thank you for granting this urgent question. I welcome the Minister to the Dispatch Box; it is just a pity that it is not the Secretary of State.
There have been deeply troubling reports for a number of months that Northamptonshire County Council has been failing in its duty to the people of Northamptonshire and to the public sector workers who provide valuable services to local people. As has been mentioned, the Local Government Association conducted a financial peer review back in September. That report had three key findings. First, it found that time was
“running out for Northamptonshire County Council”.
Secondly, it stated that the council was
“heading towards major financial problems”,
and, thirdly, it said:
“There was a sense that the scale of the financial challenge for the Council was just too great for it to overcome itself and that the government would have to bail it out.”
Since then, we have had more reports that the council was failing in its duty to the people of Northamptonshire, and residents will now pay the price for its negligence.
The failure of this Tory-run council is the result of a perfect storm of chronic underfunding and catastrophic Tory mismanagement, yet when a Government have taken £5.8 billion out of local government finance, when everyone is saying that social care is on its knees and when children’s services need another £2 billion, not only does the Secretary of State not turn up to reply to an urgent question, but he sticks his head in the sand and fails to give local government the money it needs to provide safe, decent, quality services. This situation shows, yet again, that we cannot push the cost of local government on to council tax payers, because that just does not raise enough money locally. The Secretary of State knows that, the Minister knows that, the Treasury knows that and the local government sector knows that, so when will Ministers stand up to the Chancellor and demand the money that local government needs?
The Local Government Chronicle suggests that at least 10 other local authorities are preparing to issue section 114 notices. The sector will look very closely at how the Minister treats Northamptonshire, so what contingency arrangements does he have in place should other authorities fall over the cliff edge? What guarantees can he give from the Dispatch Box that services in Northamptonshire and across the country will be protected by his Department? Will he join Sally Keeble, Gareth Eales and Beth Miller—Labour’s candidates in Northamptonshire—in calling for the appointment of commissioners to fix this mess?
It was announced last night on Twitter that the Secretary of State was in the process of politically fixing the financial mess he has made for his Tory Back-Bench friends. Two years ago, the transitional grant scheme gave out an additional £3 million of funding, but 80% of that went to Conservative-controlled councils, 70% of which were county councils. By contrast, metropolitan districts got only an extra 2%, despite being the hardest hit. In the light of that, we will be watching the Minister and his Department very carefully, because all councils are financially stretched and all councils deserve fairness.
Rishi Sunak
I thank the hon. Gentleman for welcoming me—albeit lukewarmly—to the Dispatch Box. He talks about the Secretary of State, but it is this Secretary of State who has taken action with regard to Northamptonshire. It was this Secretary of State who, in response to the negative opinions of the external auditors and the LGA peer review, decided to commission an independent inspection at the end of last year. That is exactly what responsible government looks like, and the Secretary of State should be commended for taking swift action.
The hon. Gentleman asked me to prejudge the outcome of the inspection, but it would be absolutely inappropriate and unfair to the council for me to do so. When the Government receive the results of the independent inspection, we will of course carefully consider its findings, but it would be wrong to draw conclusions about those findings today, as he suggests we do.
The hon. Gentleman mentioned finances. We will, of course, be discussing finances tomorrow. This Government have backed local authorities with an historic four-year funding deal that provides more than £200 billion and a real-terms increase in spending for next year and the year after. Everything is always about money for the Labour party, but the hon. Gentleman would do well to listen to the words of the chief executive officer of the Chartered Institute of Public Finance and Accountancy, who said:
“Whilst Northamptonshire has had a difficult context within which to balance its budget…other councils in a similar situation have successfully managed their budgets”.
As my hon. Friend the Member for Kettering (Mr Hollobone) pointed out, the issue is one of governance and culture. Those are the points that were highlighted and that the inspector will be considering.
Mr Peter Bone (Wellingborough) (Con)
I congratulate my hon. Friend the Member for Kettering (Mr Hollobone) on securing this very important urgent question. As he said, all seven Northamptonshire MPs have lost confidence in the leadership of the county council. There is no question that this is about money; it is about the governance of the county council. Its cabinet has to go, and it has to go now. The vast bulk of county councillors of all political parties on Northamptonshire County Council are impeccable, but there has been a clique running that cabinet, and that is the cause of the problem. If there had been a committee system, this could not have happened. I am not saying that a cabinet system does not work elsewhere, but we need to ensure that Northamptonshire County Council has a committee system in future. Does the Minister agree?
Rishi Sunak
My hon. Friend makes some intelligent points, and I know that he has represented his constituents well on this issue. I am sure he will understand that I cannot comment on the particular governance arrangements that should be in place at Northamptonshire, but he is right to highlight that governance is important to the conduct of the authority. I am sure that the independent inspector will consider that during his deliberations.
Mr Clive Betts (Sheffield South East) (Lab)
Yesterday, the Communities and Local Government Committee was looking at business rates and local government finance, and we heard from witnesses from the LGA, CIPFA and the County Councils Network. When we asked whether any other councils were in a similar position to Northamptonshire, the answer we got was not this year, but that many councils are on a cliff edge. With the coming pressures on not just adult social care but children’s services, some councils could fall over that edge next year without additional resources. These comments were made by Conservatives as well as Labour representatives. Is the Minister aware of other councils that will be in this position next year? If so, what action is he going to take to prevent them from getting into that position?
Rishi Sunak
My Department is in constant dialogue with individual councils and the LGA. It funds the LGA with £21 million to conduct peer reviews, so that we can build up a detailed picture of what is happening across local authorities. When there are issues in which we need to be involved, we will of course be involved. We will keep the situation under review.
Andrew Lewer (Northampton South) (Con)
I declare an interest as a vice-president of the Local Government Association and an author of other LGA peer reviews. As a former leader of Derbyshire County Council, I believe that local mismanagement has led to this situation, but I also believe that there are Northamptonshire and sector-wide fairer funding issues to be addressed. Prominent among the funding problems is the huge and growing cost of adult care. Will the Minister consider establishing a royal commission on health and social care, as well as making changes to the funding formula?
Rishi Sunak
I thank my hon. Friend for highlighting the importance of social care. It was in response to the pressure on social care budgets that this Government announced in last year’s spring Budget £2 billion of new funding for social care. We will be discussing that more broadly tomorrow. My hon. Friend is also right to highlight the importance of fair funding. The fair funding consultation opened in December, and I urge all councils to make submissions to the consultation, so that we can start to put in place a new funding formula for local government and ensure that it captures all the cost drivers that councils think are relevant.
Liz Kendall (Leicester West) (Lab)
I was in Northampton yesterday for an event celebrating 100 years since some women first got the vote. The Conservative county council’s appalling mismanagement of services and finances has left local residents deeply concerned. They want and deserve answers. So what specific guarantees can the Minister give that local services will be protected, particularly for children in need, the elderly, and vulnerable adults?
Rishi Sunak
The hon. Lady is right to highlight constituents’ concerns. Of course they are concerned about what they are seeing. That is why I am glad to be able to reassure them that the statutory financial officer at Northamptonshire County Council has said that he will maintain all funding for statutory safeguarding of vulnerable children and adults, and that he has the flexibility to take any steps and approve any payment that he sees fit to deliver exactly that objective.
Tom Pursglove (Corby) (Con)
As ever, I could not have put it better than my hon. Friend the Member for Kettering (Mr Hollobone), not least because all seven Northamptonshire MPs were told by cabinet members before Christmas that Northamptonshire County Council would be able to balance its books. May I press my hon. Friend again on the point about the inspector being invited to make an interim recommendation? That would be very welcome because it would help to give some much-needed reassurance to my constituents.
Rishi Sunak
I appreciate where my hon. Friend is coming from, but I have to remind him that the inspector is independent of the Government and does not communicate directly with Ministers during this process. He has been asked to report back by 16 March, which is a considerably shorter timeframe than previous inspections, and he has the option to report back as soon as he feels that he has been able to complete his work properly and objectively.
Wera Hobhouse (Bath) (LD)
It is of course completely untrue that councils are independent. Most council funding comes from central Government, as we all know. Has the Minister considered the potential merit of creating new council tax bands, especially on high-value properties, as that would make council tax fairer and create extra revenue? Again, however, this is not a decision that councils can take unilaterally—it has to be taken by central Government.
Rishi Sunak
That is not something I am actively considering, having only been in the job for a couple of weeks. On the hon. Lady’s broader point about council tax, the Government have increased the council tax referendum limit by 1% for the forthcoming years to allow councils to raise additional funds should they see fit.
John Howell (Henley) (Con)
Northamptonshire has very close links with Oxfordshire at a whole number of different local government levels. Can the Minister reassure me that this crisis in Northamptonshire will not affect the deals that Northamptonshire has with Oxfordshire and the people of Oxfordshire?
Rishi Sunak
My hon. Friend, as a former councillor himself, will be very familiar with these issues. Obviously, the details of individual contracts will be a matter for the individual officer concerned, but nothing in the inspection process itself should change any of those contracts as of today.
Stella Creasy (Walthamstow) (Lab/Co-op)
The Minister boasts of a settlement given to local government. Northamptonshire’s accounts show that in the next five years it will owe £240 million to private finance initiative schemes, of which £77 million is interest alone, paid to shareholders. Does he therefore agree that it is time for a windfall tax on the excessive profits of these companies, so that we can put the money where it is needed—in our public services, not in the pockets of these legal loan sharks?
Rishi Sunak
The hon. Lady talks about funding for Northamptonshire. Let me tell the House the numbers. Northamptonshire will be receiving a £30 million increase in core spending power for the forthcoming year. That represents an over-3% increase in its total budget, comparing favourably with the national average of 1.5%. On top of that, Northamptonshire will have access to its business rates retention, which on its current trajectory will include another £4 million of additional resources available.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Since 2010, there have been multiple requests from Liverpool’s leader and MPs inviting Ministers to come and look at our local authority finances. We have even sent train tickets to a previous Secretary of State that have gone to waste. Will the Minister now accept the request and come to see for himself the severe financial strain that Liverpool is experiencing, along with many other councils across the country?
Rishi Sunak
I would be delighted to visit Liverpool on the hon. Lady’s invitation. I was just being briefed by my officials on the good work that her council is doing on the troubled families programme, particularly with vulnerable children. I would be delighted to accept her invitation and meet people in Liverpool in due course.
Lilian Greenwood (Nottingham South) (Lab)
Northamptonshire County Council has completely failed its citizens and its staff. Northamptonshire MPs have consistently voted for huge cuts to local government funding, and Ministers have refused to listen when Labour Members described the impacts of rising demand for services and even deeper cuts to our councils. When will the Minister listen and respond to the budget crisis facing all councils, including my own City of Nottingham Council?
Rishi Sunak
The hon. Lady asks “When?” The answer is tomorrow, when we will be debating the local government finance settlement, where councils will see a real-terms increase in their core spending power this year. As I have said, Northamptonshire itself will be receiving at least a 3% increase in its core spending power next year.
Clive Efford (Eltham) (Lab)
The Minister did not answer the question from the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts). How many local authorities is he talking to that have concerns about their funding next year?
Rishi Sunak
It would be wholly inappropriate for me to give a running commentary on councils that we might have a conversation with. As I told the Chair of the Select Committee, my Department consistently monitors all councils and is in dialogue with all of them—as well as the LGA’s peer review process, which we fund—to ensure that we have a good, consistent picture across local government of what is happening on the ground.
Alex Norris (Nottingham North) (Lab/Co-op)
On 19 December, I extracted a commitment from the Secretary of State, who is not in his place, that the transition grant was finished. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, that grant overwhelmingly went to better-off communities and those with Conservative administrations. Can the Minister assure me that in the light of the calls overnight, following the section 114 notice, for the transition grant to be reinstated, it will not be reinstated?
Rishi Sunak
I can tell the hon. Gentleman that the written statement will be laid later today. We will be debating these issues tomorrow, and he will have the answers to all his questions then.