Local Government Finance

Part of the debate – in the House of Commons at 5:55 pm on 22nd February 2017.

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Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton 5:55 pm, 22nd February 2017

That is the central point of my remarks.

In 2016-17, 13 London boroughs either froze or lowered their council tax. That is not possible in areas such as North Yorkshire. To show that I am not just plugging rural areas, let us look at the lowest spending local authorities. We have York with £615 per head, Trafford with £639, Kirklees with £673 and Leeds with £696, and yet we have Westminster with £1,100 a head and Kensington and Chelsea with £1,168 a head. This simply cannot be right.

This is happening, as my hon. Friend Robert Neill said, because the system is based on what happened before. Einstein once said:

“We cannot solve our problems with the same thinking we used when we created them.”

We created the problems and we need new thinking. The simple solution must be to use cost drivers. Cost drivers can be only two things: need and the cost of delivery. It is as simple as that. The simpler the formula that we use and the more understandable it is, the more we will all buy into the system.

The fair funding review commissioned by the Secretary of State is critical. I support that method, but we need a blank canvas and a new approach to the problem. The clear opportunity is that more money is going into the system. Whatever the Opposition may say, between £11 billion and £13 billion will be going into the system by 2020 because of the retention of business rates, and there must be a quid pro quo for that. Ultimately, more money is going into the system, and it is said that a rising tide will lift all boats. It is difficult to rebalance a system when no new money is going in, but more money is going in. Spending rounds are clearly tight, and the Secretary of State will have to be careful about where that money goes to ensure that he gets bang for his buck, but this is an opportunity. However long it takes—be it five or 10 years—if we set off on the right path, we can turn a system that is fundamentally unfair into one that is fair and equitable, and that delivers fair resources to my local authorities and to those in the rest of the country, including London.