Local Government Finance (England)

Part of the debate – in the House of Commons at 5:10 pm on 10th February 2021.

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Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster 5:10 pm, 10th February 2021

I am delighted to be able to contribute to this debate on local government finance. I declare an interest as a current local councillor, although with no executive responsibility. As a former council leader, I believe wholeheartedly in the importance of local services for local people, now more than ever. The covid-19 pandemic has clearly shown that local councils are crucial to delivering local services and prioritising local need. I pay tribute to councillors and officers up and down the country for their outstanding work, particularly over these most difficult times we are experiencing.

Whether it is Westminster City Council supporting and enabling community volunteering through Westminster Connects, we have all come to rely on local services, perhaps much more than ever before. I and residents in my constituency are grateful for the support that central Government have provided to local authorities to aid the response to the pandemic. Westminster received more than £29 million last year to support its crucial services, and the City of London just over £1 million. Looking forward, I understand that Westminster City Council can expect to receive almost £10 million in further covid-19 emergency funding in the coming year, and the City of London almost £300,000. Sadly, that support remains necessary.

Colleagues in Westminster City Council tell me that there has been a 10% reduction in business rate collections and a 6% reduction in council tax collections in comparison with the previous financial year. The deficit for 2020-21 is estimated to be £231 million. I welcome the increase in funding for local services included within this settlement, particularly the support it plans to offer authorities to further improve our response to rough sleeping and homelessness. I care deeply about that issue, particularly rough sleeping. One way to support local councils in this area would be to work cross-party and cross-Department to repeal and replace the outdated Vagrancy Act 1824. I am working with charities, including Crisis, St Mungo’s and The Passage to present Ministers with a workable policy for updated legislation to improve the prospects of those currently living on the streets.

As much as the pandemic has highlighted many strengths in delivering local services, it has also highlighted some weaknesses. I am sure that my right hon. Friend the Secretary of State is all too aware of the fragmented delivery of services in London. The current Mayor of London has let down local people and local authorities across the capital. I would welcome a reassessment of London devolution. Perhaps local London councils could be provided with some of the executive roles currently undertaken by City Hall.

Last year, I made my maiden speech during the debate on the local government finance report, and I highlighted then, before covid had even struck, the weaknesses I perceive in our financing of local government. The problems are systemic and chronic. Covid, I have no doubt, will be a catalyst for change in how the private sector will do business. Likewise, it should be a catalyst in the public sector. Councils remain far too dependent on central Government for support. Council tax remains a regressive tax, impacting on the poorest in our society, and it is ripe for reform.

A flat property tax to replace council tax and rates has been recently mooted. Although I certainly welcome fresh thinking on the issue, I did not agree with Jeremy Corbyn’s Labour party’s idea of a mansion tax, and I do not agree with a property tax either. One straightforward solution would be to give local authorities the power to introduce additional council tax bands above band H. It does not make sense that a person living in a £15 million apartment in Westminster still only pays £2,000 in council tax. An approach of having extra bands would raise much needed extra revenues.

Westminster Council’s hugely successful community contribution scheme, introduced under my leadership, raised over £1 million in two years. That clearly demonstrates that people living in higher-valued properties are prepared to contribute more, and they need to be allowed to do so.

Business rate reform must also be escalated, as bricks and mortar retail suffers against online retail. Given the recent pressure of retail lockdowns, and as office workers consider their working patterns, it is inevitable that the commercial market will change. Business rates must adapt and change with the market, to support local authorities in being able to offer residents the local retail and business environment that they desire. I welcome the Government’s review and stated aim of increasing parity between digital and bricks and mortar businesses. I also hope that the forthcoming Budget will announce the continuation of the business rates holiday. Reforming council tax, business rates and the whole of local government finance is vital if we are to address desperately needed reform in areas such as social care.

If you will forgive me, Mr Deputy Speaker, I would like to end by plagiarising the summing up of my own maiden speech a year ago. Now is the time for brave, bold reforms and for new thinking to ensure that those on the frontline in local government are given the freedoms they need and are calling out for to help their communities to thrive and to grow in a truly open, global Britain.