Robert Neill
Main Page: Robert Neill (Conservative - Bromley and Chislehurst)Local Government Finance Bill
Robert Neill Excerpts(11 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Helen Jones (Warrington North) (Lab)
As the Minister said, many of the amendments in this group are technical. I do not wish to take up too much time on them—[Interruption.] That is the Minister’s job, not mine. If his Whips want him to talk for longer, that is his problem. There are a number of issues I want to raise in relation to one or two amendments.
We do not have a problem with Lords amendment 1 or the subsequent amendments dealing with discretionary rate relief in enterprise zones, or with Lords amendment 2, which implements a recommendation by the Delegated Powers and Regulatory Reform Committee. We support that, as we did in the other place.
The group of amendments beginning with Lords amendment 19, however, which deals with administration of the rate-retention system, raises a couple of questions on which I would appreciate clarification from the Minister. Billing authorities are being required to estimate their income before the start of the financial year. That estimate will determine the amount to be paid to Government as a central share and the amount to be paid to precepting authorities, to be transferred to their own funds. There are a number of amendments consequent on that change. If amounts are different, I understand that they will appear as surpluses or deficits on the authority’s collection fund. However, will the Minister clarify what would happen where a firm paying a major proportion of the authority’s business rates closed down mid-year—an example we have raised throughout the Bill’s progress? Surely that would lead to a deficit in the collection fund, so what would the local authority’s position be? Can a collection fund be run at a deficit, or would the shortfall have to be made up from reserves? I should make it clear that I am talking about a really catastrophic event, such as a firm that pays maybe 20% or 30% of the business rates in an area closing down, as happened with Alcan in Northumberland, for example.
As the Minister said, Lords amendments 34 to 38 deal with the arrangements for assurance. It is rather typical of the muddled way in which the Government go about things that they are having to make arrangements to take effect subsequent to the abolition of the Audit Commission before they have actually abolished it—so far they have only a draft Bill. The amendments ensure that the Secretary of State will define the assurance requirements though directions and produce certification instructions—I am sure he will work on them personally over the Christmas holiday. The amendments show the mess that the Government have got themselves into. They have no legislation ready to abolish the Audit Commission, yet they are having to put in place provisions in this Bill. The Government have ended up giving yet more power to the Secretary of State, in what was supposed to be a Bill to give more power to local authorities.
I would be grateful if the Minister clarified those points before we move on to the next group of amendments.
Robert Neill (Bromley and Chislehurst) (Con)
I welcome the stance that my hon. Friend the Minister has taken with this Bill. It is sensible to adopt the Lords amendments that he has outlined, and I am glad to see them. When I was responsible for the Bill in my previous role, they seemed to me to offer useful clarification and to strengthen the Bill.
I am particularly pleased that my hon. Friend referred to pooling. It is important that we encourage local authorities to explore to the maximum the opportunities that pooling makes available. The reason for that—the reason I think the Lords amendments are helpful—is that as the economy picks up, as it will, development opportunities will in many cases enhance the interdependency of neighbouring authorities. My London borough of Bromley is a good example. Many people in Bromley work in central London, but they are effectively part of the same economic area. The borough council pays for the services it gives people as residents, who contribute to the London economy through their work in the west end, the City of London or elsewhere, including, in some cases, across London borough boundaries—they may work in Croydon or somewhere such as that.
There is therefore great merit in giving local authorities not only the maximum flexibility to pool, but the maximum encouragement to do so, because one would not want a council to approve a substantial development on its boundaries that might bring it all the financial benefits, but which needed planning support from neighbouring authorities under the duty to co-operate and their good will because of where the work force come from. Pooling is important, and the Lords amendments give us sensible flexibilities.
Importantly, pooling fits with some of the other parts of the Government’s localism agenda. One of the arguments made earlier—I noted it in their lordships’ discussion—was about enabling local authorities to have adequate critical mass with their retained business rates, which they can use for tax increment financing, for example. The Bill has been important in taking steps forward on that. A pool will have a greater critical mass of funding, which can be used to approach the markets and enables greater leverage.
George Hollingbery (Meon Valley) (Con)
My hon. Friend did a great deal of work on the Bill, for which I thank him. The Select Committee on Communities and Local Government visited Manchester some months ago, where we saw some fantastic examples of regeneration. Some had gone incredibly well, although admittedly one or two had not gone quite so well. Does he feel that pooling arrangements are likely to help such projects in future?
Robert Neill
I believe they can. Manchester is an interesting example. Indeed, my hon. Friend must be intuitive, because I was about to say that pooling can often fit sensibly with the other development that we have seen—in which Manchester has been something of a pathfinder—which is the establishment of joint authorities. It is a classic means of dealing with co-operation by local authorities from the bottom up without the need for—dare I say it in the current climate?—unitary reorganisation. The ability to form a joint authority creates the ability to procure jointly, pool business rates jointly and, therefore, invest jointly, as well as a raft of other things, which are beyond the scope of this Bill.
Andrew Gwynne (Denton and Reddish) (Lab)
I am with the hon. Gentleman on pooling and how economies such as those in Greater Manchester work, but he should not get too carried away with the Manchester example, because my understanding is that Tory Trafford and Liberal Democrat Stockport are not very keen on the idea of pooling resources.
Robert Neill
All those authorities signed up to the concept of the joint authority. Any pooling will have to involve sensible negotiation between the various authorities about what is in their mutual interest. I would have thought that a degree of caution was perfectly understandable at this stage in the process. The important thing we are doing in this Bill is putting in place the legislative means to enable areas such as Manchester and other areas with pooling to take up more of the opportunities as, I hope, confidence grows. I hope that my hon. Friend the Minister will confirm that the ability to pool is yet another reason the Government have no intention of going down the route of imposing top-down unitary reorganisation—I am sure this is a timely moment at which to remind ourselves of that point. I hope that the opportunity to pool will also encourage other conurbations to develop a similar approach to that being taken in Greater Manchester. Pooling would provide a means of achieving many of the benefits of what were once described as city regions, without the need for the top-down imposition that went with those arrangements.
Jake Berry (Rossendale and Darwen) (Con)
Does my hon. Friend envisage pooling working across county boundaries? My constituency lies in the east Lancashire economic area—within which co-operation would work well—but quite a lot of the economic activity spreads over into Yorkshire. For example, a lot of businesses have their headquarters in Lancashire and premises in Yorkshire.
Robert Neill
I must confess that my view on that has shifted somewhat. I was initially sceptical about cross-county boundary pooling, because of the potential administrative complexities involved. For example, we would have to consider how to deal with the tier split where two-tier areas were involved. It might be easier to achieve where only adjoining unitaries were involved. We should not rule it out totally, however. It is important to recognise that the proposal that we are debating fits into the broader localism agenda, in that it recognises that economic geography might not follow the purely administrative geography of an area. I am in favour of maximum flexibility, and my hon. Friend has raised a good example. In my area, Bromley would probably fall within the area of Greater London, but there are some local authorities on the edge of London, such as Thurrock, Slough and Watford, whose economic geography would make them as much a part of the London economic area as of the shire county of which they are a part. I hope that the Government will consider this as an option, provided that the technical issues can be resolved. Perhaps the Minister will deal in detail with the important point that my hon. Friend has just raised.
It is particularly useful to explore that point in the context of the pool providing an opportunity to raise funding for infrastructure investment. Earlier this week, in our debate on the Public Service Pensions Bill, we discussed raising the cap on the amount of local authority pension funds that could be put into infrastructure investment. I favour raising the cap, as the Bill proposes. The proposal before us today would provide yet another means of raising revenue streams that could be put together to enhance the amount of a local authority’s investment leverage.
It is worth bearing it in mind that that happens elsewhere in Europe. We see a degree of it in the Federal Republic of Germany, but the area that I know best is in France. The French have developed quite sophisticated models of co-operation, known as communautés urbaines. They are generally similar to a Greater Manchester-style joint authority, stretching across a conurbation. An example that I know well is that of greater Toulouse, which, thanks to the pooling of resources, has been able to procure, invest and deliver infrastructure jointly. This has led to the development of a metro system in Toulouse, a tramway going out to the suburbs and improved road links to Blagnac airport. Toulouse is an historic city with a considerable learning pool in the centre, but it is also inextricably linked to Aérospatiale and the avionics industries around Blagnac, which are outside the municipal boundary. I am reminded that such co-operation was the logic behind local enterprise partnerships.
James Duddridge (Rochford and Southend East) (Con)
My hon. Friend knows my constituency well. I see parallels between his examples and the expansion of Southend airport, which is owned by Southend unitary authority but located in the district of Rochford. How would the proposals impact on my constituents? It sounds as though they could present an exciting opportunity.
Robert Neill
I am quite well acquainted with my hon. Friend’s constituency, and I have visited Southend airport on a number of occasions. He has provided a classic example of how pooling could unlock significant opportunities. As he knows, Southend’s boundaries are tightly drawn around its urban area, but it is clearly part of a broader south Essex conurbation. Its development opportunities, of which the airport is an example, lie almost entirely outside its boundary, but people would think of them as being part of Southend because they form part of the economic area. It would cause all manner of upheaval if we were to resolve the problems through the top-down imposition of a unitary structure in south-east Essex, as we have seen happen elsewhere.
Mr Speaker
We are all looking forward to the development of the hon. Gentleman’s further arguments with eager anticipation.
James Duddridge
Before my hon. Friend rushes on to his next point, may I slow him down a little and draw him back to the pooling of funds? He has spoken eloquently about my constituency of Rochford and Southend East, but does he think that areas involved in such pooling arrangements need to be contiguous? For example, there are many synergies between Thurrock, a unitary, and Southend, another unitary. The two are close, but they do not actually touch. Similarly, along the Thames Gateway line, we see places such as Margate and other seaside towns that could work well together even though they are not neighbours. Would they still be able to pool?
Robert Neill
That is taking the argument beyond what I was considering when I left office, which gave me more time to reflect on these matters. My hon. Friend and I both had a little time to reflect over the summer. Like me, he has been putting it to constructive use. I think there is merit in providing that option: why not? If the economic geography is such that the two areas hang together, why should we rule out such a possibility? In this day and age, investment decisions will be driven precisely by factors such as economic characteristics, infrastructure opportunities and the nature of the work force and the market, rather than by geographic contiguity alone.
I mentioned earlier, for example, that Slough has a great deal in common with the economy of west London, without being actually contiguous to the London borough of Hillingdon. As I recall, a little bit of the county of Berkshire is located between the two. If such arrangements were wanted, merit could be seen in allowing Slough to enter into a pool with Hillingdon, with some other west London authorities or with Watford. Equally, going in the other direction, Slough might want to involve Reading. There is an argument for saying that there is a natural economic geography that starts almost at the Hammersmith flyover and which goes out through Brentford and then through what is generally called silicon valley. Those opportunities are also important.
George Hollingbery
My hon. Friend is making an interesting argument. I wonder if I might plumb his expertise a little further. It occurs to me that some of the local enterprise partnerships that have been formed are natural economic areas that plainly do not run according to local authority boundaries. I am thinking particularly of what I think is called the Gatwick partnership, which runs from Croydon all the way down to Brighton. Indeed, in my own county of Hampshire, we have the M3 partnership, which runs up that artery towards the businesses and markets of London. I want to examine my hon. Friend’s knowledge of this subject. Is it possible for local authorities to pool partially, as it seems to me that in certain cases—with the Solent partnership, for example—there would be some logic in that? It seems right and proper that some of the moneys from Portsmouth and Southampton should be invested in that partnership or be centred on its work, but perhaps those two cities could look outside that area as well. Will he explain how that might work?
Robert Neill
I suppose it comes back to the technical issues that I mentioned on coping with tier splits in two-tier areas. We should not rule out the ability to try to achieve that, particularly if it can be done by agreement. It would be interesting to see if partial pooling could be achieved. It might not be something that happens at the beginning, but the point to remember about the whole of this local government finance reform is that it is making a major change in providing the legal mechanisms and the tools necessary for local authorities to use in relation to retained business rates. That is very important in itself, as this is, after all, the first time in many of our political lifetimes that the Treasury has forgone an element of revenue.
At the moment, all the business rates are, in effect, nationalised, taken back to the Treasury and distributed on a formulaic basis, which does not provide the sort of incentive for economic development and investment that we all wish to see. The Bill puts that right. I hope it will be possible to make pooling more attractive over time. As the deficit is paid down and the economy grows, the local share available to go into the pool can perhaps increase from its current 50% level. That would make retention as a whole and pooling more attractive, because the pot produced from the pool will, of course, be greater, and therefore even more attractive as a potential investment vehicle. I think we should examine the case with some care.
Jake Berry
As my hon. Friend develops his argument, I would be interested to hear how his views might relate to east Lancashire. When we formed the LEP, the borough council of Rossendale, which I represent, did not want to go into a wider Lancashire LEP. Eventually, it did so, however, and I think the then Housing Minister made absolutely the right decision on that occasion, as the arrangement has proved to be a great success. When it comes to the pooling of two-tier authorities, I could foresee a situation in which Rossendale council, which looks south towards Manchester for economic growth, would want to team up with the Associated Greater Manchester Authorities, but Lancashire county council could wish it to remain within Lancashire county for pooling purposes. In that exact situation, in my hon. Friend’s opinion, who would have sway and which argument would win?
Robert Neill
If I were a lawyer, like my hon. Friend, I would be advising the parties to try to come to some negotiation rather than litigating, if I might put it that way, as it would not be in the authorities’ interest to get into a dispute. The general approach has been, of course, that in the two-tier areas the bulk of the incentive should rightly go to the planning authority, as its members have to take the decision to allow development that may sometimes be controversial. It is right for such an authority to say to its electors, or to the people who sometimes complain about what the planning authorities do, that there are benefits to come from looking at the bigger picture, some of which will be captured for the local communities. I can see why that would be a sensible development, but it does not mean that I have become an advocate of unitary restructuring. It might be simpler, but the fact remains that the two-tier option has been taken into account in respect of the structures put in place by the Bill.
Robert Neill
If I may finish the point, I will happily give way to my old sparring partner. I think we should be prepared, as we develop the scheme, to provide maximum flexibility.
John Healey
I apologise for not having been able to be present at the start of the hon. Gentleman’s contribution, but I have come in at a very interesting part of his speech. Does this not show up the exact problem with two-tier areas and two-tier authorities, in that fostering and supporting economic growth is so much more than simply the planning system, as it involves education, skills and transport? Many such responsibilities in two-tier areas are held at county level rather than at district level.
Robert Neill
I do not see it as a problem; the issue can be grappled with and dealt with. The right hon. Gentleman and I have debated unitary restructuring on more than one occasion over the years, and we end up on different sides of the fence. My point is that through co-operation it is possible to ensure that the economic development levers, which generally sit with the county council, can be sensibly allied to the development levers, which sit with the district council. A good example can be found in Essex, as Chelmsford has a successful local planning authority in Chelmsford borough council—it might now be Chelmsford city council since the town has been given city status—and has not experienced the friction that is sometimes used as an argument to justify unitary authorities. Both the county and its county town have recognised that it is in both their economic interests to grow Chelmsford as a significant hub in that part of the world. In that case, unitary reorganisation was not necessary to achieve significant economic regeneration in Chelmsford.
I have to say that some of the downsides of unitary reorganisation that we saw under the previous Government, when it was enforced against the wishes of the local authorities, were a distraction from the serious job of getting on with economic development, promotion of the area and encouraging investment by sensible planning decisions. These issues can never be seen in isolation. The incentives in the Bill, linked with the duty to co-operate in planning terms, provide a further incentive for sensible arrangements not only between adjoining local planning authorities, but with the county authority as a highway authority, as highway considerations are often important in determining where development is acceptable and therefore where the investment might come from.
Robert Neill
There is a bit of queue. I shall give way to my hon. Friend the Member for Bedford (Richard Fuller) first, as he rose first.
Richard Fuller
I am grateful for my hon. Friend’s generosity in giving way, first because I know that he is eager to deal with other matters in his speech and I do not wish to delay him unduly, and secondly because to describe myself as a novice when it comes to local government finance would be an insult to novices throughout the country. I have learned more about the subject as a result of listening to my hon. Friend, who exhibits the patience of Aristotle teaching one of his slower students.
Robert Neill
My hon. Friend has raised a couple of important points. I shall begin with the last, if I may—and I shall not forget the other Members who wish to intervene.
We should not make the error of thinking that unitary status is always a solution. Some unitary authorities that are on the small side do not follow their natural boundaries, and their critical mass is towards the lower end of the scale in terms of economic, financial and managerial capacity. It is clear to us now that the creation of a string of fairly small unitaries was not necessarily the best solution. We should not assume that unitary is always good and two-tier is always bad. Some unitaries work and some do not; some two-tier areas work, while in others there are tensions. We need to ensure that they work better in future, and I believe that the Bill and the Lords amendments will be one means of helping them to achieve that.
My hon. Friend’s point about perception is important too. I experienced some frustration when I was first elected as a councillor in the London borough of Havering in 1974—[Interruption.] I must tell the hon. Member for Hartlepool (Mr Wright) that it was a little after the Municipal Reform Act 1835, but it was a while ago nevertheless. In those days, not only was I one of the few members of our 60-odd-strong council who were interested in taking part in the pan-London bodies that we had to have, but I was regarded as very dangerous—dangerously outward-looking—because I had stood for the Greater London Council as well. In 1974, some members of the borough council still thought in terms of the two predecessor authorities. We did not have cabinets in those days, but there was concern about whether the committee chairmen were drawn sufficiently from the Romford end or the Hornchurch end, even if they were members of the same political party. That inward-looking tendency is one of the bigger challenges that we face in dealing with local government as a whole, but attitudes have improved massively since those days in 1974, which is to local government’s credit.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I remind the hon. Gentleman that we are discussing an amendment. I know that he has been tempted away from it by the hon. Member for Bedford (Richard Fuller) and that he wishes to return to it, but I should like us to get past 1974, right up to date, and back to the amendment, on which I know that the hon. Gentleman was about to enlighten the House.
Robert Neill
You are, as always, the guardian of rectitude in this place, Mr Deputy Speaker, and, as you know, I am always the willing servant of rectitude in these matters. The point that I was making was that we had indeed moved on a great deal since 1974, in terms of thinking as well as chronology. The situation is better than it was. However, we still have to deal with some entrenched thinking. I believe that, by promoting pooling, the amendment can break down some of that thinking, which, as was pointed out by my hon. Friend the Member for Bedford, can spill into other areas of policy decision-making as well as those relating to local government finance. I hope that, by encouraging economic investment, pooling will make it easier and more desirable to provide the educational opportunities cited by my hon. Friend in the context of free schools. His point was well made: all the various legislative measures interact as part of a broader localism agenda.
Now I must not forget the hon. Member for Hartlepool, who tried to intervene earlier.
Mr Iain Wright
I am grateful to the hon. Gentleman, who is being characteristically generous and engaging. I want to move on from 1862, when he was first elected, and away from 1974, when you were born, Mr Deputy Speaker—I hope to catch your eye again: that is why I am trying to be as helpful as possible—to today. Has the hon. Gentleman had a chance to look at Lord Heseltine’s review, which was published today, and which strikes me as very significant in relation to local economic development? In particular, has he had a chance to read recommendation 11? It states:
“All two-tier English local authorities outside London should pursue a path towards unitary status. The Government should encourage this and work with authorities to clarify the process and enable it to happen.”
Notwithstanding his earlier comments, does the hon. Gentleman agree with that?
Robert Neill
I must preface my remarks by saying that I cannot pretend to have read all 200-odd pages—
Robert Neill
I note that the hon. Gentleman has both read them and counted them. Anyway, I cannot pretend to have read all of Lord Heseltine’s tour de force of a report, but the cursory reading that time allowed me while I was preparing my brief notes for the debate—[Laughter]—did give me a flavour of that helpful and valuable document. I think that it contains much that we, as a Government, would wish to take on board. As for the specific point raised by the hon. Gentleman in relation to recommendation 11, I do not agree with it, for reasons that I have already given. I believe that an imposed form of unitary restructuring is unnecessary, and that the devices and tools given to local authorities by the amendment reinforce the reasons for not following the route proposed by Lord Heseltine.
James Duddridge
My hon. Friend the Member for Bedford (Richard Fuller) described himself as a novice. I am less modest—I thought that I understood the amendment before I came into the Chamber—but, despite the eloquence of my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), I have become somewhat confused. Perhaps you will allow me a slightly lengthy intervention, Mr Deputy Speaker, in order to avoid a lengthy speech from me later in the debate.
The “Commentary on Lords amendments” in the explanatory notes refers to “billing authorities” and “precepting authorities”. My hon. Friend has already referred to planning authorities and highways authorities. In fact, the commentary uses the phrase “major precepting authorities”, but does not explain what “major” means in this context. Perhaps I am slightly sensitive about such terms because I represent a slightly smaller precepting authority, but is a distinction being made between parish and district councils, or between major and minor precepting authorities? My hon. Friend knows a great deal more about these matters than I do, but I was equally confused by the reference to billing authorities, given that police and fire authorities are effectively billing authorities. What do those terms actually mean?
Robert Neill
My hon. Friend makes a fair point. You will be familiar, Mr Deputy Speaker, with a joke that is well known in local government finance circles. It is said that the formula grant is like the Schleswig-Holstein question. Only three people have ever understood it; one is dead, one has gone mad, and the third has forgotten. The same is true of some of the complexities of local government finance. When I arrived at the Department for Communities and Local Government, I was not wholly convinced that that was a joke, but there were some very sound officials who put me right on all occasions.
The nomenclature to which my hon. Friend refers is slightly historic, but it is important. For practical purposes, the billing authority will be the unitary authority in the case of the Southend part of my his constituency, and the district council in the Rochford part. In most cases the major precepting authority is a county council. In Greater London, in my case, the London borough of Bromley is the billing authority, but the Mayor of London and the Greater London authority is the major preceptor. I think fire and police authorities also count as major precepting authorities. That is because of how they have developed and become separated from the county councils, although they were originally intended to be part of them.
Robert Neill
Let me finish the point, and if I am not making it clear, perhaps I will need to repeat it.
The major preceptors have certain statutory rights in respect of consultation, and they do more or less what its says on the tin: they deliver a significant amount of services, especially in county councils, and in two-tier areas the county council precept will often be the largest part of the bill, rather than the district council element of the council tax, although they are, of course, itemised separately.
James Duddridge
My hon. Friend is endeavouring to explain the situation, but I am now less convinced that I support the amendment. The explanatory notes refer to passing a proportion of the amount to the major precepting authorities. Will that be in only one direction, so Southend could pass to Essex county council, but Essex could not pass to Southend even if it was in the wider county’s interest?
Robert Neill
That point is slightly different from the pooling point. I was talking about the provisions that deal with the tier splits. We are returning some of the moneys—the business rate—directly to local government. That was formerly taken by the Treasury and distributed by formula grant. Some of those moneys will be needed to fund district council functions in two-tier areas, and some will be needed to fund county council functions in two-tier areas.
That highlights why there has to be a passing of money. It is collected by the billing authority; that is the case at the moment. Southend borough council and Rochford district council collect all the business rates and then have to send the money to central Government as, I think, a monthly payment. It is then returned in the local government finance settlement each year, predominantly by way of the formula grant—although there are one or two other grants, as this is a slightly complex world. We are allowing authorities to keep some of that money at the beginning, but because it has to fund two types of authority—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sure the hon. Gentleman will want to address his comments through the Chair, rather than personally across the Bench to his colleague, as he is currently doing. I am also sure that he is not filibustering; I can see that there is no organisation.
Mr Deputy Speaker
I think there is about to be another intervention on you, Mr Neill.
Robert Neill
As you know, Mr Deputy Speaker, the last thing I would ever wish to do is filibuster. I have spent a large proportion of my life dealing with local government finance, and I wish we could explain things in one simple sentence, as that would make life a lot easier for many of us.
I have outlined the essence of the issue, and the reasons why we have references to billing authorities and major precepting authorities. There are other precepts; the parish council can levy a precept, but it is not a major precepting authority. Very occasionally, there will also be certain levies put on top, but for our current purposes we need not discuss that and add further confusion.
Usually the district council in a two-tier area is the planning authority, and it is also the billing authority. Importantly, however, for investment purposes—this is where this point links in with the question of business rates retention—the highway authority will tend to be the county council, which often has significant economic development resources that district councils do not have, and the education authority will be the most significant body for the skills agenda and in attracting the required work force. That is why pooling makes sense. It links the pooling of resources with pooling and collaboration on a raft of issues, which is essential in the modern world.
Richard Fuller
For many of us, Mr Deputy Speaker, my hon. Friend’s speech is not a filibuster; it is a master class in explaining some of the intricacies of non-domestic rates and pooling. Having listened to his account of the complex relationship between different authorities, I think I may be slipping from my novice ranking. I ask my hon. Friend to return to his response to the hon. Member for Hartlepool (Mr Wright), who referred to today’s report by Lord Heseltine. Does my hon. Friend agree that there are some valid arguments in Lord Heseltine’s suggestions on unitary authorities, as they will help to simplify the relationship between businesses and local authorities? This is an extremely important point. As this is a master class, I think all of us would like to hear a very full response from my hon. Friend.
Robert Neill
My hon. Friend is very kind. He knows a great deal about this topic, as I know from having visited Bedford on a number of occasions when we were in opposition and he was the prospective parliamentary candidate.
Robert Neill
I will be delighted to take responsibility for my hon. Friend’s arrival in this House.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I say to the hon. Gentleman that we do not need to rehearse the CV of any Member. Furthermore, I am worried that Members may become more confused about the issues in hand after his detailed explanations. We must now address the amendment alone, and not embark on a tour of the country.
Mr Deputy Speaker
Order. Let me reiterate that we will now deal with Lords amendment 1 and we will not be distracted from that.
Robert Neill
Lords amendment 1 is important because it enables pooling, and pooling is one reason why irrelevances such as unitary reorganisation need not trouble the Government in the future.
John Hemming (Birmingham, Yardley) (LD)
I represent a Birmingham constituency. The local government structure in the area arises from the fact that the West Midlands county council was abolished in 1985 and three functions were dealt with separately: the police and the fire service are now precepting authorities, while the integrated transport authority—it used to be the passenger transport authority—is not a precepting authority. In terms of encouraging economic development, therefore, there is a key question as to whether pooling serves to improve transport. Will the Minister comment on—
Mr Deputy Speaker
Order. The hon. Member for Bromley and Chislehurst (Robert Neill) is a former Minister; he is not still a Minister. Also, interventions need to be shorter. If Members wish to speak, they should put their name down, and I am sure we will be able to accommodate them.
Robert Neill
My hon. Friend makes a fair point. When seeking clarity on these matters, we are sometimes bedevilled by history. A passenger transport authority would, I suspect, be a levying authority rather than a precepting authority for the purposes under discussion. At present, it would not necessarily fall within the scope of this pooling. It is important to raise such topics, however. There must be a means whereby the pooling of retained business rates includes incentives for transport authorities. In Greater Manchester, the solution has been the creation of a joint authority. There might be merit in considering a similar solution in Birmingham. I am sure the Minister will take that point on board, and I ask him to address it in his concluding remarks. It is also worth pointing out that if there is a large amount of money in the business rate pool, more money can, of course, be leveraged into investment, particularly for infrastructure purposes—and infrastructure investment is precisely what authorities want.
John Hemming
The key point is that public transport is an important driver of economic development, and it therefore needs to be encouraged through the pooling process.
Robert Neill
I agree, and I am sure we will be able to find ways to address that. The amendment in question and the pooling of business rates is one of the tools, and it is an important one, but it is not the only tool the Government are putting into the local authority box.
Andrew Gwynne
Greater Manchester provides a good example for pooling resources, and not only in terms of business rates. The 10 district councils of Greater Manchester have already decided to pool their local transport fund allocations. That is a gamble for some of them, because they are not getting the direct benefits of the new Metrolink extensions, while other parts of the county are.
Robert Neill
That was a helpful intervention, and I hope that it will go some way to helping my hon. Friend the Member for Birmingham, Yardley (John Hemming), because one important source of funding for passenger transport authorities is the allocations that come to the constituent local councils, which they can then use. This is about ensuring that there can be a sensible linkage. If they pool the allocations, it will be logical to find a mechanism whereby they can pool the product of the retained business rate, so that the two can be aligned. The hon. Gentleman makes a very important point.
George Hollingbery
Understanding, always, that this is exclusively about the pooling of business rates, it occurs to me that there might be the odd occasion when councils wish to pool some element of their council tax. Will my hon. Friend confirm whether that was considered as a possibility for the Bill or whether it was rejected at an early stage?
Robert Neill
When I was in the Department, we did not get into the issue of pooling council tax, for the simple reason that we were dealing with the business rates element. As I saw it, the first step in the equation was to secure the return of a significant amount of business rates revenue to local authorities, rather than for it to be taken back through the nationalised system, as I might call it, whereby it goes to the Treasury and is then redistributed through the formula grant, the point being that over a period of time we would be able to make local authorities less dependent on formula grant as the principal source of their income.
Interestingly, we should perhaps explore, as a future step along the road, the means whereby local authorities might voluntarily—I stress that this must have a voluntary basis—examine ways of aligning their council tax receipts. After all, authorities can seek to pool the product of that in their investment decisions at the moment. I referred to the success of the communautés urbaines in France, which has come about because they have been able to set up joint investment funds and procure directly. In a sense, they have been putting together the product of their local taxes, and we might able to do that. We must remember that the billing authority sets the level of council tax in any given place, but there is no reason now why local authorities in an area could not deliberately align their council tax levels if they wished to do so to make sure that their area was not disadvantaged economically by having different rates within what might be almost the same built-up area. That is important. The level of the business rate is not changed by these proposals, because the multiplier continues to be set nationally, but the incentive is in retaining the product. The amendment provides us with the important tool of giving maximum flexibility in the pooling of the product to get the maximum benefit from investment for the area, particularly in economic development terms.
Jake Berry
On the amendment and its effect on enterprise zones, I have been an advocate of the do-it-yourself enterprise zone, which I hope could be achieved in east Lancashire, along the M65 corridor, by using the localisation of business rates. Local authorities would be able to give rate holidays to people who set up new businesses within a DIY enterprise zone. This amendment allows a deduction for rates which should have been in the enterprise zone. Would that preclude the DIY enterprise zone or encourage such a zone?
Robert Neill
It ought to be a means of encouraging that type of zone. That seems to be the logic of the proposal. Being able to offset and make the deduction is necessary in ensuring that there is an incentive. I am sure that the Minister will be able to confirm that position. My hon. Friend the Member for Rossendale and Darwen makes an important point about the interaction of pooling and enterprise zones: it is important not to create a disincentive to having an enterprise zone. Equally, we must not create a distortion in the local economy whereby investment is purely sucked into an enterprise zone because of the benefits, and other parts of the local authority area or the conurbation, which happen not to be in an enterprise zone but have real development opportunities, are set at a disadvantage. It is important to make sure that we get that interaction right.
Jake Berry
We have heard today how Lord Heseltine has produced an excellent report, and we must remember that he was the first proponent of enterprise zones. Does my hon. Friend believe that if the amendment is agreed to there will be a peppering of mini enterprise zones, which could be run by local authorities or groups of local authorities by pooling business rates and enabling advantages locally? There could be, for example, a mini silicon valley in Rossendale. Does he think that is the likely outcome?
Robert Neill
I hope that if there is the political and economic will to do that, we will see it; I favour the maximum diversity in these measures. We should seek to give the maximum flexibility to local authorities on how they use these various tools, because that is genuinely localist. What will be appropriate in Rossendale will probably not be appropriate in Bromley, but it is sensible that those alternatives are available. I want an emphasis on outcomes, rather than on structure or process. Breaking down the barriers that can sometimes be an impediment is an important part of that. My hon. Friend the Member for Bedford talked about a mindset. Just as breaking that down is important, so, too, is breaking down the structural impediments that might stifle the initiative that I am increasingly finding local authorities want to take up through the opportunities that come from business rates retention. That is an important part of the mix that we must introduce.
John Hemming
One of the issues about hypothecating the pooled revenue from national non-domestic rates is that we can develop further employment. Does the hon. Gentleman feel there is merit in having a facility for localised sector tendering, funded by a transport authority, receiving money through the pooled process of the national non-domestic rates—it is now localised non-domestic rates, of course—on the basis that that would make it easier for people to get to work by bus?
Robert Neill
That is an interesting proposition. I had not specifically applied my mind to it and I cannot say off the top of my head whether or not the legislation would permit it. I am sure the Minister will be advised on that before he responds. We ought to be examining all these matters.
I am conscious that this is a technical measure and that we have to discuss a number of other important measures. I have probably said all I need to say on pooling. Other elements of a more technical kind are contained in the schedules, which are addressed in amendments 19 to 82. I would not dream of dealing with those individually, but it is important that we examine them carefully—yet briefly—because, as is always the way of local government on these things, the devil is in the detail of the schedules. Indeed, when, as Ministers, we looked at the Bill early on, we found that most of the work is in the schedules. Amendments 19 to 82 seem to deal with some of the important issues that the hon. Member for Warrington North (Helen Jones) raised: the questions relating to how we deal with deficits or surpluses in the collection fund. The solution that the Government propose is workable and elegant, and will merit attention. The amendments clarify and strengthen the position, so I hope that they will also commend themselves to the House.
Important amendments are also proposed to the schedules in respect of the position of major precepting and billing authorities. I am sorry that my hon. Friend the Member for Rochford and Southend East is not in his place, as those amendments will help to clarify the issues he raised. I hope that those amendments, too, will be seen as important and valuable. Although there are a lot of them, they deal with certain themes, and all of them, taken together, represent a significant strengthening of the Bill. I hope that this stream of amendments will commend itself to the House.
Mr Jackson
When I was shadow regeneration Minister, I met One North East in a rather salubrious hotel in central Newcastle. I agree that it did some good work, but if we consider all the regional development agencies throughout the country, they failed in two respects. They did not ameliorate the internal divisions in the economies in their areas, because even in the north-east, the economies of Stockton and Middlesbrough are amazingly different from those of Morpeth and Hexham, and they are amazingly different from those of Bishop Auckland or the City of Durham. At the same time, the RDAs failed to tackle social, demographic and economic inequalities between the regions, and they did not facilitate the growth in private sector jobs and regeneration that we would have wanted in the north-west and the north-east, although that did happen in London, the south-east and the south-west.
Robert Neill
May I reinforce my hon. Friend’s point? I am sure that he is aware not only that the regional development agency system failed to address such regional inequalities, but that inequality between the regions actually grew rather than reduced under the Labour Government, despite the expense of such a top-heavy bureaucracy.
Mr Jackson
My hon. Friend makes a typically astute point. The Local Government Association did not have an axe to grind against the previous Government, but it produced several reports showing that the significant public investment in regional development agencies under that Labour Government did not deliver objective outputs. My hon. Friend and I have scrutinised regeneration legislation that has addressed those points.
There is an intellectual coherence in the Bill because if we are devolving power to the lowest level, which the hon. Member for Mid Dorset and North Poole talked about, and if we are to give local authorities a vested interest—and fiscal incentive—in driving regeneration and growth on the basis of local priorities, which my hon. Friend the Member for Rossendale and Darwen (Jake Berry) mentioned, local enterprise partnerships are the model to use. Those partnerships are driven by business and give local authorities of whatever political persuasion the opportunity to show leadership and vision.
I will be honest with hon. Members: there are some fantastic Labour councils, such as Lewisham and Wigan. I am positive about Wigan, which is a fantastic place to live, because my wife is from there. It is unfortunate that it has a Labour council, but to give it its due, it is doing a good job. The local enterprise partnerships have a complementary relationship with the new homes bonus, and there is therefore a fiscal incentive to drive forward a philosophy on the basis of local need. Money comes into the pot via the new homes bonus, and then local authorities may make a value judgment about whether the quality of life in their area is such that they wish to build hundreds or thousands of new homes, or to keep things as they are. Authorities know that they will not get that fiscal incentive for the delivery of core services. My local authority in Peterborough wants to build 25,000 homes between 2009 and 2026, so it will have a fiscal incentive to encourage the building of private sector and shared equity housing, as well as social and affordable housing.
Brandon Lewis
My hon. Friend makes a good point, and he makes it so well that I have no doubt that the Treasury will have heard it directly, so I will leave it there.
Robert Neill
I congratulate my hon. Friend on the admirable speech he is making and warmly congratulate him face to face on his new appointment. I am delighted he has succeeded me. I think that we share the same philosophy in these matters. He made an important point about pooling, for which I am grateful, and there are some other issues that my hon. Friend the Member for Meon Valley (George Hollingbery) raised. As I understand it, the key element in Lords amendment 1, which deals with my hon. Friend’s point, is that the Government have undertaken to fund the discretionary rate relief in relation to enterprise zones so that there is not the disincentive to have an enterprise zone that there might otherwise be. Will he indicate that that is the way the rate relief will be delivered so that we can be sure that it is worth while for a local authority to have an enterprise zone without prejudicing the benefits of rate retention?
Brandon Lewis
I thank my hon. Friend for his intervention and hope that you, Mr Deputy Speaker, will allow me 30-seconds’ leeway to thank him for his kind words. This is the first time I have been at the Dispatch Box during a debate in which he, who he is a good friend, has spoken, so I want to put on the record how fortunate I am to be following in the footsteps of someone who laid so clear a path, and one that I support and agree with. Equally, that offers a challenge, because I have quite an act to follow. As in all the matters we are discussing this afternoon, he is absolutely right that enterprise zones are structured in that way so that there is no such disincentive. It is important to bear in mind how the incentives work. Business rates retention offers local authorities a clear incentive to help drive growth, because they will benefit from all the growth they see. That is something we very much want to see so that local authorities are absolutely at the heart of driving economic growth.
I will turn now to some of the question hon. Members asked. The hon. Member for Warrington North asked what happens when a major business goes down mid year, a point the hon. Member for Hartlepool (Mr Wright) also touched on. The payments to major precepting authorities would be set on the basis of estimates of income made by the billing authority. Those payments will not change, so billing authorities might need to consider how they would fund any shortfall in the short term before the safety net calculations are made.
Helen Jones
My right hon. Friend is right. The reduction in the money available for council tax benefit is not the only thing that we are dealing with. The very same councils will be hit by the Government scheme for business rate localisation before being hit again by the reduction in the amount available for council tax. The Government call it a 10% cut, but in fact it is much more than that, because their calculations are based on what they think the cost of council tax benefit payments will be next year. It is no surprise to hon. Members who have followed the Bill’s passage through Parliament to learn that the Government believe that the cost will go down. In fact, the number of claims is rising as more people face reduced hours of work or unemployment. The Government have produced a wonderful document, which could have been written by Pollyanna, stating that claims will go down because the number of people on jobseeker’s allowance will go down and pensioner take-up will decline and so on. That is nonsense.
Robert Neill
The hon. Lady is very good at rubbishing proposals for reform, but will she accept her and her party’s responsibility for getting into a situation whereby spending on council tax benefit doubled on their watch? Given that they are so good at criticising everybody else, what would they do to reform the situation and actually help councils get people back into work?
Helen Jones
I say to the hon. Gentleman that the one thing we would not do is target the poorest and most vulnerable for cuts at the same time as giving a tax cut to millionaires. The Government’s priorities are entirely wrong.
Helen Jones
First, we would not give millionaires a tax cut. We would introduce the measures that the shadow Chancellor has set out, which would raise money to invest in infrastructure. The hon. Gentleman also has to bear in mind the contradiction in the Government’s policy. They want councils to grow their local economies, but at the same time they are taking a massive amount of money out of the most deprived local economies—money that would otherwise be spent in shops and businesses.
Helen Jones
May I make a little progress? I have given way quite a lot.
We need to think clearly about who the people affected are and what the Government think of them.
I have been reading the Minister’s blog; it is very entertaining and I recommend it to my hon. Friends as it is a treasure trove of Tory doublethink. The Minister begins by repeating the usual mantra that if someone is not in work, it is their own fault. He states that too many people
“expect to be able to rely on benefits and those who are hard at work are starting to get the hump.”
Let me say to him that 1,540 people in Great Yarmouth might start to get the hump with him because they are employed and in receipt of council tax benefit.
There are others. Will the Minister tell his disabled constituents, the vast majority of whom would like nothing better than to have a job, why they face an increase in their council tax? The Government trumpet their council tax freeze while imposing council tax rises on the poorest people in the country. When the Minister next visits a group of carers in his constituency—people who do daily the things that most of us could not imagine doing, and who save the country millions of pounds every year—will he say why their reward is an increase in council tax?
Elsewhere on his blog, the Minister writes that
“the sign of a compassionate country and a modern democracy is how it caters for those who are most vulnerable.”
That is what I mean by doublethink, which I think Orwell defined as the ability to hold two contradictory ideas at the same time, while believing in both of them.
Helen Jones
My hon. Friend is entirely right. I already find in my constituency that the organisations to which I used to refer people for help—as, I am sure, did many of my hon. Friends—are so overburdened, or in some cases have closed down, that help is simply not there. This is a very short-term policy that is causing financial instability for local councils and is an attack on the living standards of the most vulnerable people. The least the Government can do is hold a review in three years’ time.
It may be that the Government still believe that the system will work—although that is increasingly looking unlikely—but I think they are beginning to get cold feet. They know what these reforms will do in their constituencies and local authorities, and that they will be unworkable. By the time we get to the review, it is likely that the Ministers who introduced these measures will have moved on. The poorest and most vulnerable people, however, will still be paying the price. I hope that the Minister will at least accept a review, because by the time it takes place, it will be obvious what a miserable, vindictive and failed scheme this is.
Robert Neill
That was a vintage performance from the hon. Lady, full of high-blown rhetoric, plenty of sneering, sarcasm and knocking copy, and devoid of a single element of constructive analysis. It was devoid of any sense of constructive alternative, and recognition of the reality of the economic mess for which her party was responsible. It was devoid of any sense of shame. The greatest shame in the House lies on the Labour party. The greatest threat to the living standards of the most vulnerable—
Helen Jones
The hon. Gentleman is getting very worked up again, but may I remind him that, when his Government took office, the economy was growing and unemployment was falling? If he calls that a failure, what does he call the longest double-dip recession since the war?
Robert Neill
I call the greatest deficit in our peacetime history a failure. The benefits system that Labour created was so confusing and complex—it has some 32 different benefits in it—that it is virtually impossible for anyone to navigate it. I call that a failure. I call the fact that spending on council tax benefit doubled over the 13 years of the Labour Government a failure, because they did not achieve what should have been the objective of aiding people back into work. Some of my constituents have not known the opportunity of work for three generations. I call that a failure. The suggestion that the Labour party did anything other than fail is a bogus one. No amount of rhetoric and high-flown words can hide that reality.
We have not heard from Labour Members what they would do about the problem. They have made not a single constructive suggestion.
Robert Neill
If the right hon. Gentleman will be patient, I will give way to him in due course.
What would Labour Members do to make the saving, which is a necessary contribution to the reduction of the deficit they created? We have not heard anything about that. What would they do to reform the system to increase the incentives to get people who are unemployed into work? What would they do to ensure that, when people move into work, the loss of benefit is not too great a disincentive? Our transitional scheme seeks to deal with that, but what would they do? We have heard not a word on that.
Mr Raynsford
I am grateful to the hon. Gentleman for giving way. I listened to him for almost an hour earlier in the debate, so I hope he will not ask me again to be patient—I have been very patient already.
I put it to the hon. Gentleman that he is complaining not about rhetoric—we have heard quite a lot of his rhetoric—but about the experience of Members of Parliament who know from their constituencies that very large numbers of people will be badly hit by the measures, and will suffer hardship, deprivation and poverty as a result of them. He should be ashamed of the remarks he has made.
Robert Neill
The right hon. Gentleman is always touchy when his Government’s record is called into question, but he must learn to live with that, because his record is questionable. The simple truth is that the Labour Government’s doubling of spending on council tax benefit is not a success; it is a mark of failure. I have heard not one word on what Labour Members would do to redress the situation.
I am relaxed about whether there is a review. The provisions of the Bill require local authorities, at local level, to keep their schemes under review. I am confident that a national review would demonstrate that the measure is necessary. Not a word has been said by Labour Members about how they would make good the funding gap that would be left if nothing were done. There is nothing from them about that. It is like the old prayer that is adopted—“Lord make me virtuous, but not yet.” They say they want to reduce the deficit, but they will not tell us when or how they will do so. Failing to reduce the deficit damages the underlying economy, real and sustainable growth, and the prospect of real and sustainable jobs for the very people about whom they claim to be concerned. Locking people into a massively complicated benefits system, which they created, is not helping—[Laughter.] Labour Members’ laughter demonstrates the air of unreality that hovers over them. They will not accept their responsibility. They behave like ostriches. To paraphrase the late George Carman QC, they prefer to put their heads in the sand, thereby revealing their thinking parts.
George Hollingbery
As I have said, it is inevitable that those who are on benefits suffer when benefits are withdrawn, but there is nothing compassionate about the long-term failure of the previous Government to address the number of people on benefits and the enormous increase in the bill for those benefits. The inevitable consequence was that one day, when spending had to contract, as it now most definitely does, that group of people would suffer. What is compassionate about that?
Robert Neill
My hon. Friend is absolutely right. There is nothing compassionate about that. The attitude of Labour Members is blinkered—to put it as charitably as I can. They think the only way to deal with people compassionately is by continuing with a rigid and failed system.
Andrew Gwynne
For a split millisecond, the hon. Gentleman had me sold on the idea that he was convinced about a simplified benefits system. If he is convinced, why does he believe council tax benefit should not be part of the universal credit system? The proposals will result in a different council tax benefit system for every local authority area in the country.
Robert Neill
The hon. Gentleman, whom I respect in these matters, makes an interesting point. I have two points to make in response. First, we consulted prior to the design of the system, and one question that came up is whether we should include council tax benefit in the universal credit. The cross-party local authority associations did not want that, which we reflected in the Bill. That was their view at the time and I still believe they were right. We adopted a localist stance, and we need take no lessons on that.
Secondly, the hon. Gentleman says there will be different approaches in different areas, but I should gently tell him that he betrays the error of the Labour party’s thinking. Labour Members take a monolithic approach, but local economic circumstances, the demands on people who are not in work, and the demand that they place on council budgets, vary from place to place. The whole point of localising the scheme is to recognise that local authorities are generally better placed than a monolithic and centrally administered scheme to recognise the particular influences on the jobs market and routes back into work in different places.
Mr Christopher Chope (Christchurch) (Con)
I congratulate my hon. Friend on the work he put into the Bill, which is a worthwhile contribution to localism. Does he agree that one great virtue of localism is that it gives elected local authorities the opportunity to inculcate their values in the local community? Tendring council might have values it wants to promote in the context of the legislation, but socialist local authorities might want to implement more socialism locally.
Robert Neill
My hon. Friend is absolutely right. Labour Members’ approach is bizarre. They claim to be localist but object when anything is localised. They claim to recognise the need to reduce the deficit—I am never quite sure about that—but never actually say how or when they would do it. Instead, they just give a blanket criticism of anything that seeks to move things forward.
Brandon Lewis
The hon. Member for Warrington North (Helen Jones) talked about West Oxfordshire and Westminster councils not having schemes as if that was a bad thing. Does my hon. Friend agree that, actually, the decision to protect local residents by not changing the schemes is an example of the very point we are making—it is about local choice?
Robert Neill
The words of Little Sir Echo from the Opposition Benches!
My hon. Friend the Minister is absolutely right. The decision to use the default scheme is a local choice. The ability to design schemes in different ways is, and should be, a local choice. It is strange that there should be any objection to that. The Government have provided help, of course, and not only through the transitional scheme, which I regard not as a mark of weakness but as a mature and sensible reflection on how to proceed in a constructive way. [Interruption.] Again, that sense of unreality wafts across from the Opposition Benches. They prefer to exist in this land of denial where nothing is wrong with the current system, when it is manifestly failing.
Mr Betts
Given that the hon. Gentleman was previously the Minister in charge of the Bill, will he explain why, if it was a mature and sensible reflection, he did not have it a year ago? How can it possibly strike him as mature and sensible halfway through the period when local authorities are consulting on the policies they are trying to develop?
Robert Neill
We did some very sensible and mature things a year ago: we paid out £30 million upfront to assist with the design of the scheme; we gave early notice of our statement of intent; we enabled local authorities to run their consultations early while the secondary legislation was going through; and we listened to suggestions for further refinements, such as ensuring that the taper works smoothly so that it eases people back into work as their income rises. The Government should be congratulated on taking all that on board, not criticised, but that is not going to happen, of course, such is the Opposition’s unreal mindset. They seem to have locked themselves into a closed way of thinking.
What is the best way of getting people back into the labour market? How do we deal with the fraud that, I regret to say, is an issue with some benefits? The vast majority of benefit claimants act honestly and properly, but significant sums are, I am sorry to say, lost to fraud. That is far better dealt with locally, because local council officials and members have better local knowledge and are better linked to the various enforcement agencies. Significant savings for the honest and genuine claimant can be made through the better running of the scheme and by dealing with issues such as fraud, but those things are better dealt with locally.
George Hollingbery
In considering the proposal from the other place for a review over the next two or three years, does my hon. Friend agree that there is scope for the administration of grouped or pooled schemes across a local area? Under such a scheme, specialist advice, such as fraud advice, might be more economically obtained.
Robert Neill
That is a sensible and useful point. As in our earlier discussion about pooling business rates, there is sense in pooling some of the critical mass and resource available between local authorities. Again, if we are trying to get people back into the job markets, which might span more than one local authority area, it is sensible for there to be a means for local authorities to work together. That is a constructive suggestion. Would that we had heard any such constructive suggestion from the Opposition.
Robert Neill
I will give way to the hon. Gentleman, who is an old sparring partner from London days.
John McDonnell
The hon. Gentleman might remember from those days that I was involved, as an officer, in setting up the local fraud units, which were successful. We learned then that chasing small amounts of money, which these will be, was not cost-effective. What happens is that others decide, “If I’m not going to be chased, I won’t pay.” The problem with this proposal is that it will increase fraud, not reduce it.
Robert Neill
The point I take from the hon. Gentleman, whose experience I respect, is that, yes, it is not sensible to chase very small sums of money, but that is why the transitional scheme, for example, works to incentivise councils not to do precisely that. We have sensibly reflected on that.
It is important that we get to grips with this intractable issue. Amendment (a) sounds innocuous, and if my hon. Friend the Minister advises the House to accept it, I would have no difficulty in doing so, but the Labour party has not tabled it out of an interest in carrying out a significant and worthwhile review. It is simply a device for the Labour party to get off the hook for not having any constructive alternative to put forward.
Mr Raynsford
I have heard a number of speeches by the hon. Member for Bromley and Chislehurst (Robert Neill), but that was probably the worst. There was a total failure to acknowledge any problem with the proposals we are debating this afternoon and an attempt to deflect blame, rather than recognising that he has created something that will haunt him, his colleagues and all Members of Parliament, who from next April are likely to see large numbers of aggrieved constituents coming to ask why they suddenly have to pay sums of money that they do not have the means to pay. Then—this is an interesting point about the hon. Gentleman’s suggestion about fraud—when those constituents see that some councils will not pursue relatively small arrears, just because it is uneconomical to do so, they will probably think, “Well, there’s probably no need for me to pay.” If ever something were likely to undermine the culture of payment and responsibility, it is this kind of scheme, in just the same way that the poll tax undermined the culture of paying because it was seen as unfair, because it was arbitrary and because the arrears that built up took an enormous amount of time to recover.
All this is unnecessary. We can have a debate about whether council tax benefit should be localised. I have been happy to participate in that debate, and there are arguments both ways. There is an argument that council tax benefit should be part of a universal credit and benefit system. There are also arguments about localisation. We can have those debates. I would have been happy to participate in an argument about that and to try to develop either a local or national scheme that worked and that met the objectives that had been articulated. However, that is not what we are debating this afternoon. This is a ham-fisted set of proposals, cooked up by the Government in a way that shows a complete lack of joined-up thinking between Departments—the Department for Communities and Local Government is going in a completely different way from the Department for Work and Pensions—and then imposed to a chaotic timetable.
The way this House has handled the process is a cause for concern in itself. Our first debates about the Bill were in January, when the Committee stage was taken on the Floor of the House and had to be rushed through without adequate time to consider all the issues. Then the Bill was parked for three or four months. We heard nothing more about it. We wondered what was going on, until the penny dropped and one of the Clerks was wise enough to point out what was happening. The Government had suddenly realised that if they went through the parliamentary procedures, the Bill would fall with the end of the Session. They had to park it because they had not realised that the only way to get it through the current Session was not to take it through the House of Lords in the previous Session, so that they could then reintroduce it in this one.
Here we are, less than six months before the implementation of a hugely complex scheme that will affect the benefit entitlement of around 4 million people nationally, without the details agreed and with an extraordinary series of last-minute adjustments, including the transitional relief. We could not devise such a chaotic implementation programme if we tried. I am really disappointed that Ministers have not acknowledged that this is a mess. The right way forward now is to say, “We need time to get it right.” Let us give them credit: let us give them the opportunity to say that localisation is the right thing to do, but then please let us recognise that this is not the right way to do it. We have to give local authorities sufficient time to prepare, consult and carry their communities with them. We have to give them the means to do that without these arbitrary cuts, which affect individuals so harshly and unfairly, because there will be marked differences between categories of people.
Let us take the position of two households, one just over pension age and the other just under. Under the arrangements that are being introduced, if they both receive an equivalent amount of benefits, one group will be protected from any cuts because they are over pensionable age and the other will not. How will that be explained? How is there any sense of fairness whatever if those households’ circumstances are broadly the same? There will be anomalies, problems and a sense of injustice on the part of the public, and then there will be all the administrative issues in trying to collect small sums of money. It cannot make sense to proceed in this rushed way towards what is likely to be serious administrative chaos in early spring next year. The sensible measure would have been to say, “We must take stock. We must now pause and try to get this right.” Even if the Government will not accept that, they should at least confirm that there will be a review. It cannot be right to proceed with such a chaotic scheme that has gone through such a bad gestation period and that is now going to produce the kinds of problems that Members have articulated so well today, without a commitment to a thorough review.
The other place did us a service by passing the amendment that would make a commitment to such a review, and the Government should, at the very least, accept that the measure must be reviewed independently and fairly; otherwise, we shall be condemning large numbers of our citizens to an unfair and harsh series of measures that will impact on their livelihoods and that they will find impossible to understand. The Government are committing local authorities to implementing harsh and unfair measures for which they will get quite a lot of the blame. The whole thing is a terrible mistake, and I just hope that the Government will now recognise that they have a serious responsibility to the public and to local authorities to try to make the best of the very unfortunate position that they have got themselves into.