Local Government Finance

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 4:58 pm on 3rd February 2010.

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Photo of Justine Greening Justine Greening Shadow Minister (Communities and Local Government), Vice-Chair (Youth), Conservative Party 4:58 pm, 3rd February 2010

The hon. Gentleman raises some interesting points. The first was about council tax and the pressures to increase it further. It should be up to local residents to decide whether council tax rises are affordable. That is one of the reasons Conservative Members have talked about providing the ability for local residents to hold a referendum if they believe that council tax rises are unaffordable.

The hon. Gentleman also raised a point about Crossrail and supplementary business rates. The Government recently brought through the Business Rate Supplements Act 2009, about which we expressed the concern, when it passed through the House, that it could lead to extra burdens on companies. So I share his concerns about the concept of supplementary business rates-in fact, we have said that we want councils to be able to go in a different direction. We want to give them the power to levy a business rate discount, rather than a supplement. We need to give councils the ability locally to help regenerate their local economies, and I will come later to some of the incentives that we would like to see.

As I am sure that the hon. Gentleman recognises from his own local council in Croydon, councils currently spend far too much time micro-managing Government initiatives and not enough time being able to tailor what they are doing locally to local community priorities. In fact, 36 out of 52 revenue grants for local authorities are ring-fenced, so it is simply not correct to say that local authorities are being given the freedom that they need to deliver for their local communities as well as they can. We would very much like the Government to move away from ring-fencing grants and towards giving councils more freedom to deliver on local priorities as they see fit.

Only today we heard the Prime Minister talking a good game, but the reality for local councils is that they do not see that change happening on the ground. As I mentioned to the hon. Gentleman, there is very little incentive in the funding formula for councils to deliver for their local authorities. Total Place has started to provide some of the fact base, as it were, for councils to be able to do so, but we should not kid ourselves. We are at the beginning of a long road towards councils being able to get out there and not just work with other local providers, such as the NHS and the police, and with the Department for Work and Pensions, but, more broadly, deliver value for money for their residents.

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