Local Government Finance

Part of the debate – in the House of Commons at 6:06 pm on 22nd February 2017.

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Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government) 6:06 pm, 22nd February 2017

As ever, my hon. Friend makes an important point, which is generally due to his experience of running a business. The Government have made it clear that we want to move to a system of more regular revaluation.

As my right hon. Friend the Secretary of State announced earlier, he is working closely with the Chancellor to determine how best to provide further support to businesses that are facing the steepest increases as a result of the revaluation. We expect to be in a position to make an announcement at the time of the Budget, just two weeks from now.

One hundred per cent. business rate retention is being piloted from next year. It will mean that participating authorities will be able to keep more of the growth in their business rates income, with no impact on the rest of local government. As we have said, in 2018-19 we plan to undertake further pilots in areas without devolution deals, including two-tier council areas. The nationwide roll-out of 100% business rate retention will take place throughout England in 2019-20. Earlier this month, my Department published a consultation to seek views on exactly how the system should look. I look forward to discussing the matter further with colleagues from both sides of the House in the coming weeks.

While we rightly look forward to the longer-term reform that will make local authorities financially self-sufficient and provide greater incentives for growth, the settlement we will vote on today reaffirms our commitment to funding certainty for local government. The 2015 spending review delivered a £200 billion flat cash settlement for local government, and last year we delivered four-year funding allocations, which provide the financial certainty required for councils to be bold and ambitious. The settlement is the second year of a four-year offer that was debated in this House a year ago and that has been accepted by 97% of local authorities.

The settlement before us delivers on our promise and provides councils with the resources required to deliver world-class public services in the year ahead while continuing to play their part in bearing down on the deficit. We have consulted carefully, and I am grateful to hon. Members for bringing their constituents’ views to us during the consultation.

As we have heard, adult social care, which is an issue close to all our hearts, transcends party politics. I take seriously the representations made today, and I take seriously the need to ensure greater respect, dignity and independence for people who receive care. In the spending review, we put in place up to £3.5 billion of additional funding for adult social care by 2019-20, but we recognise that the coming year is the most difficult in the settlement period for many councils.

There are immediate challenges in the provision of care that must be met now, before the substantial additional resources become available, which is why we have created a new £240 million adult social care support grant and are allowing councils to raise the adult social care precept by 3% next year and the year after. Together, the measures make available almost £900 million of additional funding for adult social care over the next two years, so the total dedicated funding available for adult social care over the four-year settlement period is £7.6 billion.

As we look to the future, local government spending will be based on local resources, not central grant, so we are devising a new funding formula for local government that is fit for purpose. Earlier, the Secretary of State acknowledged the many representations that have been made, including by many colleagues here today, about how demographic pressures, such as the growth in the elderly population, have directly affected different areas in different ways as the cost of providing services has grown. We are undertaking a fair funding review to consider thoroughly how to introduce a more up-to-date, more transparent and fairer needs assessment formula. We have been working closely with local government to make sure that it works for both local government and local people, and we will make changes on the fastest possible parliamentary timescale.

I wish to deal with a few of the issues that were mentioned during the debate. First, Mr Thomas is never backwards in coming forwards. It was interesting that, although many of his arguments were reasonably inconsistent, he was consistent on not coming up with a single idea for how we might solve the complex challenges faced by this country or by local government. I was also interested to hear the comments made by Jim McMahon. He said, “Where is the money?” Well, it might be a good idea for him to take some advice from Liam Byrne; I am sure he could tell him where the money went.

My right hon. Friend Anna Soubry made some very pertinent points, particularly about unitary authorities. We are certainly willing to listen to proposals, but those proposals must be driven from a local level, and be bottom up. If her area is willing to do that, we would be more than happy to listen to its views. She also mentioned local authorities’ funding challenge. We are providing a four-year settlement, so that councils, which have additional reserves and resources, can use them to bridge their funding gap, because they will know what their situation will look like in the third and fourth year of the settlement.

It was good to hear the comments of Mr Betts. He welcomed the principle of the four-year settlement, to which 97% of councils have signed up. He advocated that any additional funding from the 100% business rates retention should go directly to help local government fund services that are currently provided. Although that may sound tempting, may I remind him that we have been very clear that the situation would be fiscally neutral? New responsibilities would come with the additional £12.5 billion that we expect to go to local government.

It was good to hear from my hon. Friend James Heappey, who is a strong champion for his constituency. I was pleased to hear his support for the fair funding review, but I did hear his concerns as well. A similar sentiment was expressed by my hon. Friends the Members for St Austell and Newquay (Steve Double) and for Thirsk and Malton (Kevin Hollinrake), and I take their comments on board. My hon. Friend the Member for Wells also mentioned the business rates baseline and the principle of resetting the system, which is an important part of the whole system. Finally, I know that he has spoken to the Secretary of State about the aggregate levy, and I will certainly look into the further points that he made today.

I certainly take on board the important points that my hon. Friend Derek Thomas made about the uniqueness of the Scilly Isles. My hon. Friend Robert Neill has vast experience in local government and as a local government Minister. I was pleased that he welcomed the idea of not including the attendance allowance in business rates retention. He was right that more needs to be done on the integration of health and social care. He was also right to advocate that the business rates multiplier uprating should be changed from the retail prices index to the consumer prices index, which the Government fully intend to do.

In conclusion, this local government finance settlement honours our commitment to four-year funding certainty for councils that are committed to reform. It recognises the cost of delivering adult social care and makes resources available sooner, and it puts councillors in the driving seat with a commitment to support them with a fairer funding formula. It will give Government the resources they need to govern and I commend it to the House.

Question put.

The House proceeded to a Division.