Designation of areas by pools of authorities

Local Government Finance Bill – in a Public Bill Committee at 4:15 pm on 7th February 2017.

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Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution) 4:15 pm, 7th February 2017

I beg to move amendment 3, in clause 3, page 3, leave out lines 31 to 45 and insert—

(a) designate one or more areas (a “designated area”) in the pool area (see sub-paragraph (2));

(b) calculate, for each year for which the designation has effect, the non-domestic rating income for the designated area (see sub-paragraph (3));

(c) calculate a proportion of the non-domestic rating income for the designated area;

(d) provide for the non-domestic rating income for the designated area, or that proportion of it, to be disregarded for the purposes of calculations under any of the following provisions—”

This amendment, together with amendments 4 to 18 would remove the role of the Secretary of State in enabling two or more authorities that have been designated as a “pool” under paragraph 45 of Schedule 7B, to designate an area, or areas.

With this, it will be convenient to discuss the following:

Amendment 4, in clause 3, page 4, line 16, leave out “The regulations may” and insert “The pool of authorities may”.

See explanatory statement for amendment 3.

Amendment 5, in clause 3, page 4, line 18, leave out from “adjusted” to end of line 21.

See explanatory statement for amendment 3.

Amendment 6, in clause 3, page 4, line 22, leave out “The regulations” and insert “The pool of authorities”.

See explanatory statement for amendment 3.

Amendment 7, in clause 3, page 4, line 24, leave out “regulations” and insert “provisions”.

See explanatory statement for amendment 3.

Amendment 8, in clause 3, page 4, line 26, leave out “The regulations” and insert “The pool of authorities”.

See explanatory statement for amendment 3.

Amendment 9, in clause 3, page 4, line 26, leave out “make provision”.

See explanatory statement for amendment 3.

Amendment 10, in clause 3, page 4, leave out lines 27 to 30.

See explanatory statement for amendment 3.

Amendment 11, in clause 3, page 4, line 31, at beginning insert “determine”.

See explanatory statement for amendment 3.

Amendment 12, in clause 3, page 4, line 35, leave out “about” and insert “determine”.

See explanatory statement for amendment 3.

Amendment 13, in clause 3, page 4, leave out line 37.

See explanatory statement for amendment 3.

Amendment 14, clause 3, page 4, line 42, leave out lines 41 to 45 and insert—

“(e) revoke any designation made by it and set any conditions that must be met before a designation is revoked;”

See explanatory statement for amendment 3.

Amendment 15, in clause 3, page 4, leave out lines 46 to 50.

See explanatory statement for amendment 3.

Amendment 16, in clause 3, page 5, line 1, leave out lines 1 to 3.

See explanatory statement for amendment 3.

Amendment 17, in clause 3, page 5, line 17, leave out “under the regulations”.

See explanatory statement for amendment 3.

Amendment 18, in clause 3, page 5, leave out lines 31 to 40.

See explanatory statement for amendment 3.

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

I will be quite brief on these amendments, because we have discussed these matters. Even for a local government geek such as myself, it has got to the point where it is a slight endurance trial.

However, we need to reiterate points about the balance of power and control, the relationship between central and local government, and the direction of travel from this Government. I will use this opportunity not to express my own views but to reflect back the views that were shared in our evidence sessions and that were expressed through evidence submitted later.

The London Councils group of local authorities has expressed concerned about the level of control the Secretary of State will have to revoke designations by removing the requirement that all local authorities in the pool agree to the revocation. The chief executive of the District Councils’ Network gave evidence. In its written submission, it said that it believes, as we do, that business rates pools should be determined locally and not by central Government.

This is not just about the Opposition making a point and taking a stand. We are doing that, of course, and we have had that conversation. We have had a vote on that basis. This is really to appeal to the Minister to listen to the concerns of London Councils, the LGA, the District Councils’ Network and many, many local authorities across the country that have expressed concern about the centralising nature of that designation provision and asked that it be reviewed.

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

I am grateful for the opportunity to discuss the Government’s proposals to allow for local growth zones. The Government support the introduction of clause 3, which would insert into part 9 of schedule 7B to the Local Government Finance Act 1988 a power for the Secretary of State to allow local authorities within pools to designate an area or areas. Within these areas, local authorities will be able to retain a proportion of business rates income outside the rates retention system for a specified number of years.

The effect of local growth zones will be similar to that of enterprise zones, providing local areas with an additional tool that can be used to help to drive local growth. The difference here is that regulations made under new paragraph 38A, which will be inserted into the 1988 Act by clause 3, gives the responsibility to local authorities to set up and define the local growth zone, within the parameters agreed with the Secretary of State. The Government consider that pools of authorities are best placed to use the power by taking a shared view across a larger functional economic area about the best way to achieve growth for the benefit of all the authorities in the pool.

Amendment 3 would allow all pool areas, once determined, to designate local growth zones themselves without parameters or restrictions over the amount of rate revenue that could be retained, or over the length of time for which the zone operates. Amendments 4 to 18 are consequential amendments that would remove the Secretary of State’s ability to make regulations on the conditions or parameters that could be attached to a local growth zone.

The creation of a zone will likely have an impact on the total amount of growth in business rates to be redistributed to other authorities at a partial reset. That will affect the overall quantum of business rates available for services, and the distribution of funding across all local authorities. It is therefore necessary to allow the Secretary of State to set parameters to ensure that the Government can maintain the balance between rewarding growth and making the system work as a whole. Parameters may also be necessary, for example, to prevent pools from designating their whole area as a local growth zone.

Nevertheless, I will take this opportunity to clarify that we intend to discuss with pools of authorities what works best for their specific local areas. Indeed, new paragraph 38A(9) includes a statutory requirement for the Secretary of State to consult a pool of authorities before making or varying regulations. The process will allow the Secretary of State to tailor the parameters set to local circumstances. Such parameters might include the size of the growth zone or the level of funding that could be retained.

I hope I have reassured Members of the need for the Secretary of State to be able to set parameters for the use of local growth zones. We need to strike the right balance between incentives for growth and sufficient resource for funding services. I therefore ask the hon. Gentleman to withdraw the amendment, and ask that the Committee agrees to clause 3.

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution) 4:30 pm, 7th February 2017

We have not settled the balance of the relationship between central Government and local authorities that may or may not want to form a business rate pooling arrangement. The Minister’s response was not satisfactory from our point of view. It is not satisfactory for local government either. I do not intend to press the amendment to a Division, but the Secretary of State will have to convince local government that devolution, economic growth, the reform of public services and business rate pooling are genuinely about the community coming together and determining for itself what its future will be. At the moment, the jury is out. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4