District Council Finances — [Mike Gapes in the Chair]

– in Westminster Hall at 9:30 am on 1st May 2019.

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Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 9:30 am, 1st May 2019

I beg to move,

That this House
has considered district council finances.

It is a great pleasure to serve under your chairmanship, Mr Gapes. I am very pleased to have finally secured a debate on the finances of district councils, which is an important subject. The fact that we got the debate now is testimony to the popularity of debates in Westminster Hall. I shall speak about a report that was published by the all-party parliamentary group for district councils in July 2018. Since our return after last year’s summer recess, I have consistently been applying for the debate, and we have finally got it, and with local elections tomorrow, it is extremely timely—persistence has finally paid off.

I am a Member of Parliament representing a district; I represent the borough of Rugby. I am a former district councillor and member of that authority, and very proud to have represented my community on the council and to have the opportunity to represent it in Parliament. As a former member of a district council, I strongly believe that they have a vital role to play in the next few years in shaping and delivering Government strategy, supporting local growth, building the homes we need and providing the preventive services that are necessary for sustainable health services.

To set the context, there are 192 district councils. In two-tier areas, they deliver 86 of 137 essential local government services to 22 million people, which is 40% of the population. District councils cover 68% of the country by area. One of their most important functions is as the housing and planning authority; they approve 90% of planning applications in their areas and enabled over 91,000 new homes to be delivered last year.

I am very proud to say that my local authority, Rugby Borough Council, saw 584 dwellings completed in 2017-18. It is a great example of a district that looks favourably on house building and development, and it has a very progressive attitude. I know the Minister saw that on his recent visit to Halton, which is an excellent example in my constituency of house building at scale, with a development that will consist of 6,200 homes by the time it is completed.

In two-tier areas, the county council area is divided into a number of districts, which each have an independent district council. I firmly believe that district councils are closer to their residents than are the vast majority of other forms of local government, which is one of the reasons I strongly believe that they should be protected. Rugby town hall is in the middle of our community. It is accessible by all residents and immediately identifiable; it gives a sense of identity to our community. I know there are pressures that are leading some areas to consider alternative arrangements—in particular, there is a move towards unitarisation—but in my area that would be neither practical nor in the best interests of our residents. Districts operate on a size and scale that makes sense to local communities, and they have a unique understanding of the residents they serve.

Photo of Alberto Costa Alberto Costa Conservative, South Leicestershire

May I take this opportunity to congratulate my hon. Friend on securing this important debate? Blaby District Council and Harborough District Council, led respectively by Councillor Terry Richardson and Councillor Neil Bannister, are both excellently run. Does my hon. Friend agree that any proposal for unitarisation of the Leicestershire area is not welcomed by the district councils?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I share the views of my hon. Friend in believing that districts are the right-sized and best-located authorities to deliver a substantial number of services to local residents. I fear that some of that connectivity and identity would be lost in a larger organisation.

I will now talk about some of the things that district councils have been able to do. One key issue that came out of our report is that district councils have a proven track record of devising innovative solutions to transform public services by taking a lead in improving services and providing outcomes for people through better collaboration. That is a really important point, which we will come back to again and again. It is driven by a financial imperative in some instances, but in many ways it is driven by the desire to do things better.

District councils have a proven track record in building better lives and bigger economies in the areas they serve. Through their roles in planning and housing, they act as the building blocks for local economic growth, and in many ways districts work collaboratively with each other and alongside newly established local enterprise partnerships to deliver growth and support local businesses and industry. I believe that district councils also protect and enhance the quality of life by safeguarding our environment, which is an issue we will be considering later today in the Chamber. Promoting public health, leisure and a sound environment is an important role, creating attractive places to live and where people will want to raise their families and build an economy. Districts are also tasked with the challenge of tackling homelessness—again, their proximity to the people and knowledge of individuals is important—and the duty to promote wellbeing.

For district councils to deliver for their residents and the businesses in their area, it is important to ensure that they have sustainable and suitable levels of funding, which is the matter I want to address. It is why the all-party parliamentary group for district councils, which I chair, held a formal Select Committee-type inquiry on the finances of district councils. We published our report, “Delivering the District Difference,” in July 2018. I want to put on record my gratitude to the 60 local authorities that provided written evidence to the APPG, and I thank the seven district councils, including Rugby Borough Council, that came before us and provided oral evidence to the APPG in Parliament. I am also grateful to many parliamentary colleagues who sat on that committee, particularly Dr Drew, who took part in the evidence sessions and is here today.

Our report was a major piece of work, and we collaborated with the District Councils’ Network to ensure that we were working closely with the sector. I thank the DCN for its valuable contribution to the report. In our evidence sessions, it came across loud and clear that district councils under financial pressures have identified innovative and efficient ways of doing things differently to provide better value for money to local taxpayers. A recent Local Government Association report found that district councils have saved £224 million through sharing services with other districts and bodies, which is far more than any other type of council.

I will give some examples of shared working arrangements that my local authority, Rugby Borough Council, has with others. Rugby has a shared service on building control with Warwick District Council and works on procurement with our neighbours, Nuneaton and Bedworth Borough Council. A particularly useful case study in Rugby involves its working closely with Daventry District Council to provide local crematorium and cemetery services. On its own, neither authority was of a sufficient size to be able to deliver these services efficiently, and my constituents wishing to use crematorium services were obliged to make lengthy journeys to either Coventry or the other side of Warwick. There had been an aspiration for such a service in Rugby for some time, but it was recognised that, in isolation, Rugby was not of sufficient size to deliver it. By working with Daventry and providing a facility on the border between the two authorities, we have ensured that the residents of both local authorities have great provision.

National Audit Office figures show that district councils have experienced the most significant real-terms cut in spending power between 2016-17 and 2019-20, which has required them to be enterprising. One of Rugby’s overarching corporate priorities is to become financially self-sufficient by 2020. It is seeking to reduce its reliance on the sometimes arbitrary and variable central Government funding sources and take control of its sources of income through local taxation arising from economic growth and investment income. When I was a councillor, I was always aware of concerns that the pots of funding might or might not be available. They were sometimes arbitrary or time-limited, which meant that it was difficult to plan for the long term. Rugby aims to be financially self-sufficient so that it is no longer reliant on those variable sources. That will ensure better provision for my constituents in the long term.

All councils have had to work hard to achieve more with less. Between 2010 and 2020, councils in England will have lost almost 60p of every pound of central Government funding. For district councils, that equates to almost £1 billion. I know the Minister recognises the role that districts have played in identifying savings, and is aware of the burden that they have shouldered in recent years.

Photo of Alberto Costa Alberto Costa Conservative, South Leicestershire

I thank my hon. Friend for his generosity in giving way again. The district councils in my constituency have highlighted the ever-increasing cost of waste and recycling services. Proposals to scrap a charge on green waste collection and introduce weekly food waste collections, although laudable, are likely to put significant financial burdens on district councils. Does my hon. Friend agree that, should district councils implement those changes, proper and full support is needed from central Government?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

There is a role for central Government, but those are local, devolved matters for district councils. One of the good things about district councils is that, because they are close to their residents, they know and understand what is best for them. My hon. Friend draws attention to the important role that district councils play in environmental matters, which are of real concern to residents.

In recent years, districts have been given more freedoms and powers to stimulate their local economies. In our report, we urge the Government to commit to retain current incentives to help district councils deliver the homes that the country needs. We are keen to see the retention of the new homes bonus. My local authority in Rugby has a very progressive attitude to new house building and is doing well from the new homes bonus, which enables local residents to support the principle that it has adopted.

During our inquiry, the all-party group heard evidence about the savings and efficiencies that can be made in social care by increasing district councils’ capacity to deliver preventive services. Mannie Ketley, the head of service and chief financial officer at Rugby borough council, told us:

“What the districts have shown, working in conjunction with the county council, is that a very much joined up approach has been of huge benefit, so I am confident that as groups of authorities come together, districts are well placed to support in the delivery of social care…Something for districts to consider, or certainly for government to consider, is our role from a prevention perspective and the ability to allow district councils to levy a prevention precept much like upper tier authorities are able to levy that social care precept. There is a huge amount of recognition of the role district councils play at the prevention end of the spectrum”.

They do that through, for example, the provision of recreation facilities that enable people to get out into the open and enjoy the countryside.

The evidence and insights that the all-party group received led us to make seven key recommendations. We identified measures, flexibilities and incentives to stimulate local growth. I want to put them on the record and share them with parliamentary colleagues. The first and most important is that no district council should find itself in the position of negative revenue support grant. That would mean that councils hand over to the Government a proportion of the tax that they raise locally, which would be a real disincentive to grow the local economy. I will come to the way in which our proposals have been addressed.

We argued that the fair funding review should reverse the decline in district council spending power. We suggested that districts should be allowed the freedom to introduce more incentives. We said that measures to increase district spending power should include greater flexibility to raise revenue and introduce incentives to support local growth.

I have already referred to the new homes bonus. We argued that the baseline should be removed, and that there should be a long-term commitment to the new homes bonus. In fact, we went further and said that district councils should be given more financial incentives to deliver more homes. The time available to local authorities to spend right-to-buy receipts should be extended, and districts should be allowed to retain 100% of those receipts.

We spoke about our concern about the lifting of the borrowing cap—I will come to how the issues have already been dealt with by enabling district councils to spend the entirety of their funding. We drew attention, as Mannie Ketley did, to the role that districts play in prevention as housing and planning authorities. They provide leisure and recreational facilities, install home adaptions, tackle homelessness, offer debt advice and deliver social prescription. We also spoke about the need to establish a health prevention fund to support projects that deliver preventive services, which would in turn reduce the financial burden on adult social care.

I am delighted that the Government allocated extra funding in the 2018 Budget and the 2019-20 local government finance settlement, and that two of our recommendations have already been acted on. Just a week after we published our report, the Government announced that they would cancel the negative rate support grant for 2019-20, recognising the disincentive effect. The removal of negative RSG has meant an average saving of more than £350,000 for every district council that would otherwise have faced negative RSG, and more than £50 million overall.

On our recommendation that there should be no further changes to the new homes bonus and that the baseline should be removed, the pot of £18 million is welcome. For my local authority, Rugby Borough Council, no change to the existing threshold means that it would not receive any new homes bonus funding for the first 150 homes delivered each year. The Government have also announced the lifting of the housing borrowing cap, which will be a very significant and helpful move for districts, and more money has been made available through the rural services delivery grant.

The all-party group is delighted that the Government have responded and listened to the voice of districts. We are grateful for that response of recognising the need for change and listening to the voice of districts. At the conclusion of the debate, I hope that the Minister will update the House about the other recommendations that our all-party group made, in particular our call for greater freedom to deliver preventive health services. It is important to invest in such services for the broader welfare of our citizens. I will also be grateful if he outlines what consideration he is giving to the introduction of further freedoms and incentives for districts to grow their local economies.

As the Government look at the technical detail behind the future funding formula and business rates retention, I hope that the Minister will provide some reassurance that districts will continue to receive their fair share of funding. For many local authorities, there is a lack of clarity, and further rates reductions for some will mean a less reliable basis on which to plan budgets appropriately. All organisations, whether in the private or the public sector, benefit from a longer-term perspective, but the funding available from April 2020 remains unclear, as is how it will be distributed and the means of delivery. It is vital for the 2019 spending review to provide the right level of funding for local government, enabling councils to perform their role. Rugby Borough Council, for example, tells me that it faces several risks from the forthcoming funding reform and has concerns about whether it can continue to deliver the high level of services it provides.

The recommendations in our report have many positive aspects across all districts. I am delighted that the Government have already adopted many of them, and I look forward to hearing from the Minister what steps the Government will take in respect of the other recommendations we made.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs) 9:52 am, 1st May 2019

I am delighted to serve under your chairmanship, Mr Gapes. I congratulate my friend, Mark Pawsey, on such an excellent exposé of the funding of district councils. I am delighted to be part of the group and to have played a small part in an excellent report. I look forward to engaging with the Minister again, and with my hon. Friend Jim McMahon, so that we can at least bring attention to bear on this important topic.

In advance of the debate, I asked my district council in Stroud what main aspects it would like the Minister to look at. I pay due regard to the council leader, Doina Cornell, and the head of finance, Andrew Cummings; both contributed to an outline of what they saw as the main funding formula issues. It would be pointless to go over the same ground as the hon. Member for Rugby, but I will reinforce what he said, which was borne out by the Local Government Association and the District Councils’ Network, both of which made excellent reports to allow us to make our contributions today.

Stroud would like the Minister to dwell on four main points. I have a couple of subsidiary ones, which I will talk about at the end. First—overwhelmingly so—is the issue of uncertainty in the sector. Local government in general faces uncertainty about the future funding regime; the forthcoming spending review will obviously have an impact on the finances of the sector from 2020-21, but we are also not sure about the new fair funding review, the changes to the new homes bonus and the resetting of the business rates baselines—they will all come together. They could be good news, but they could put local government under even more pressure.

My district was in a sense saved by the Government’s decision not to pursue the negative revenue support grant. We are one of the areas of the country in the business rates retention pilot scheme, but that is coming to an end and I am interested to know the Government’s future thinking. That all adds to the mood of uncertainty, however, and such a background makes it difficult for local authorities to set budgets. My hon. Friend the Member for Oldham West and Royton will have things to say about that.

On resetting the business rates baselines, the Government have made it clear that that is the direction of travel in which they wish to go, but they have not quite said how they intend to get there. So much depends on how the moneys already there are redistributed, and that will have an impact on district councils because we tend to be at the end of the train, rather than driving it—some of us might hope for a much greater say in how things are going.

That level of uncertainty is multiplied by the potential changes to the new homes bonus system. In Stroud district, that contributes £1.8 million, which is a not inconsiderable sum, and one that is important in allowing us to balance our budget. Again, will the Government say what they intend to do? We are talking about what the changes will imply after this year. If some of the suggestions are implemented, sadly many authorities including mine stand to lose out very badly.

Another big bugbear is the limited ability of small district councils to raise money through council tax. District councils are limited to a 3% ceiling, whereas upper-tier authorities have been granted some dispensation with the social care precept. The police have also been allowed to raise a much greater sum. I am a great fan of parish and town councils, and one of the reasons I am a fan is that they set their own budgets; they take the responsibility and are not capped.

The result—I do not know whether this is the case in Rugby as it is in Stroud—has been some offloading of responsibilities on to parish and town councils. That might be laudable, because the idea of subsidiarity and running things as locally as possible has merit, but the problem is that parish and town councils might be running things because they have to, because the district councils simply do not have the resources—although that gets us to pay attention to the difficult scenario of the threat of closure of such services. The District Councils’ Network is therefore clearly lobbying for what is called a prevention precept—the hon. Member for Rugby intimated that—and it will be interesting to know the Government’s attitude to that.

On housing, quickly—I am mainly looking at the funding per se of the councils—there are problems. Stroud District Council owns its own stock; it bought it for some £97 million. We are proud that we have built something in the order of 230 new council houses, which is a considerable increase for a small district authority. We could have the argument about the right to buy, which some of us feel is a real disincentive, but the problem is that although notionally the Government have said that the cap on borrowing has been removed, real hurdles remain in the way of driving forward that programme. At the moment, therefore, we are at a standstill, which is really disappointing, because it would be the way to deal with at least some of our problems of homelessness and of other means by which people get into the housing sector. I hope that the Government will look at what is happening, and why there is not the drive towards what some of us want to see, which is council housing at least being part of the solution, rather than being seen as a marginal element.

I have a couple of final points to make. Planning is always a real bugbear, because we are forever expected to provide more housing, which is right, and more jobs, which is right. The problem is that there are not necessarily the means to do that. The Government’s formula means that Stroud is being asked to provide something like an extra 48% on top of its normal provision, and the question of how that will be done is causing real heartache in communities. There are very few ways in which the provision of services can be guaranteed if the housing is provided, so the Government need to look at their planning proposals. That is all bound up, because it affects the new homes bonus, which is the incentive, but if the funding is not carried through, there is very little benefit for local authorities and the people they represent.

Waste is a difficult issue. Stroud District Council has a proud record of collection. It is one of the greenest authorities in the country and has a good record for collecting food waste. I will not go into the politics of this, but we have a new incinerator about to go live and the county is starting to remove tax credits for recycling. That is totally bizarre, because we talk about the need to drive up recycling and to avoid waste. I could go on at great length about that; I have said many things in the past about it and no doubt will in future. Would the Minister look at some of the ways in which the smaller district local authorities are penalised by what I see as a mad dash towards incineration?

I share the desire of the hon. Member for Rugby to get this topic heard. It is a pity that a few more people are not in the debate. We are a bit of an endangered species because so many authorities are going unitary. I was talking to Andrew Selous about that, because in Bedfordshire they are in the process of doing that. I support unitary—the Minister responded to my debate on unitary—but until Gloucestershire grasps the nettle, we have to do the best we can for our district. Many people look to that authority for the bulk of their services.

I hope the Minister listens to the need for certainty and proper funding, and that he recognises that those authorities are doing valuable work on waste and new housing, and more particularly on the services that are so important to everyday life.

Photo of Jim McMahon Jim McMahon Shadow Minister (Housing, Communities and Local Government) (Devolution) 10:02 am, 1st May 2019

It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate Mark Pawsey on securing this debate, although its importance is not reflected in the number of speakers. Nevertheless, that does not mean that the work done by district councillors across England is not critical and life changing to millions of people. I place on record my thanks to our councillors of every colour, and I wish every candidate success, in different degrees, in tomorrow’s local elections.

The vibrancy of local democracy is what communities are all about. Most of us have come into politics through local government, because we are passionate about the places we live in and the power of positive politics to make a difference. District councils reflect that in a special and unique way because of how grounded they are in the local population. They are important also because they are the primary deliverer of neighbourhood services. I think about what makes an area somewhere decent to live; it is those neighbourhood services that make life worth living—a decent park, good quality countryside, clean and safe environments, and access to cultural facilities such as libraries. They all make up the fabric of our local communities.

There are tensions between districts and councils, but generally they work well together and, between them, provide good quality services for our communities. Like every council in England, they are under huge financial pressure. It is a bit simplistic to look at a spreadsheet, which we do whenever there is a local government finance debate, and to dismiss the cash cuts to district councils as being quite small. Their budgets, however, are much smaller. The percentage loss, particularly across critical neighbourhood services, has been profound in many district council areas. Rugby has experienced a real-terms cut of 47% to cultural services for recreational sport, open spaces and tourism. People feel the impact of austerity even at a district level.

That brings me to the fair funding review. We can all argue about how we have ended up here—we do that on a regular basis. The challenge, which is similar to that for adult social care and children’s services, is that most of the issues should not be party political. They are not political—they are about the delivery of public services in local communities. Regardless of the places we represent and live, we all want good quality public services to be available to everyone.

Political parties need to unite on some of the issues—local government does that anyway—and find long-term, sustainable solutions to how we fund local public services. We have a fair funding review today, but who knows when a general election will be called? A change of national Government matters almost more to local councils than to any other part of government, central or local, because it has a direct implication for how they are financed.

Every Government have always moved money around to favour the areas where they have strong representation. When there was a Labour Government, my locality had enough money to fund public services. It was never quite enough because we always wanted to go further and do more, particularly on housing and the local economy. Then, we had a change of Government and there was a shift. There is a good chance that when the cycle comes back around, the reverse will happen. That is not the way to fund sustainable public services. It does not give credit to our public servants who work for local authorities and it is not fair on the local councillors who have to deal with that cycle of spending turmoil. It is not right for the taxpaying public, either.

On cross-party consensus, the Local Government Association—I declare an interest as a vice-president—carried out an independent review of local government funding a number of years ago. It looked at the then current state and at what type of future structure could provide sustainability and value for taxpayer money. We need to look at some of those ideas.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I am listening carefully to the hon. Gentleman, who seems to be making a pretty strong case for local authorities becoming self-sufficient. Is that what he is arguing?

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

I understand the calls for that, but I stop short of it, or anywhere near it, because the ability to fund local government public services is so heavily dependent on property taxation, which causes huge geographical inequalities across the country. We want a funding formula and structure where funding follows need. If we give local authorities financial independence there will be significant winners but also significant losers. My strong view is that council tax places a disproportionate burden on local taxpayers in terms of overall taxation. It has been expected to fund too many local public services while the central Government grant is being reduced. Business rates are near breaking point. Those taxes serve a very important purpose, but they also have significant limitations.

Whether it is a district or unitary council, the connection between the tax people pay and the neighbourhood universal services they receive is very healthy for democracy and transparency in governance. I am not sure whether the same is true of social care and children’s services, which in general benefit a smaller number of the local population. Those services are targeted, not universal, and have no relationship to local property values in 1991 or the business rate base that has been built up over hundreds of years. At some point there will have to be a separation of the two, for a purer connection between the council tax that people pay locally and the neighbourhood universal services they receive in return. There should be a properly assessed fair funding formula to ensure that funding goes where older people need care, children need social services, and homes need to be built to resolve homelessness. If we were to do that, it would be a start.

The LGA’s independent review also recommended that there ought to be an independent body to assess the total requirement across England. It would not, of course, set the Treasury’s Budget, but it would make recommendations to the Treasury about the total sum local government needs for the requirements placed on it by central Government. If the recommended sum was £1, the Government might decide to provide 90p of funding and distribute that according to an independently assessed fair funding formula.

Another suggestion, which has huge merit, is that we should establish local public accounts committees. Our councillors see on a daily basis where money is spent in their areas by a range of Departments, in a way that almost no other elected representative does. That provides important insight into how money could be used to better effect. Establishing a local public accounts committee would effectively allow a local authority to hold the ring on all the public sector spending in its area—to ensure that there is no duplication, that any gaps are identified and filled, and that people can work more collaboratively for better public services. Our councillors have proved, and all the evidence shows, that they are best placed to deliver public sector efficiency. They are rooted in the community, they know how to deliver public services, and their insight would help the whole of Government.

To be honest, however, even after all that, there is still not enough money in the system. We know that there will be a funding gap of more than £3 billion by the coming financial year, and by 2024-25 that gap will have increased to £8 billion. The truth is that people are living longer and need care. We know that if we do not give them care in their homes, we will put pressure on the acute sector and the NHS. We also know that children need safeguarding. We can have good processes and screening in place, but ultimately we have to provide protection for young people. The threats are increasingly complex, particularly with the growth of online social media and so on, and councils need the capacity to deal with that. Many are struggling under the weight of those two pressures.

Will the Government meet us halfway and agree to take some of the politics out of local government spending, for the benefit of all of local government? Will they be radical in challenging the Treasury to cough up for once and provide the money that is needed to fund local public services? Will they show leadership and stop pitting council against council? This is not about urban areas and rural areas, or counties, shires and unitaries; this is about local people and local public services, and every man, woman and child in England deserves decent public services.

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government) 10:12 am, 1st May 2019

It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate my hon. Friend Mr Prisk on securing the debate and on his work in this place to champion the role of district councils, which he does with passion and eloquence. I have been in this job for just over a year; I have enjoyed all the work I have done with him, and district councils are lucky to have such a champion for their cause in this place. I also pay tribute to Dr Drew, who deserves credit for his focus on the issues concerning district councils.

While I am on the subject, my good friend John Fuller, the president of the District Councils’ Network, is an irrepressible advocate and champion for district councils. I am sure the only reason there is slightly lower attendance at the debate than usual is that everyone is out campaigning hard in their local communities for the district council elections. I join Jim McMahon in wishing everyone well on Thursday.

We are here to discuss the “Delivering the District Difference” report, which was released some months ago. I was pleased to be able to attend its launch, and I pay tribute to everyone who contributed to the production of that fantastic document. As my hon. Friend the Member for Rugby pointed out, it highlights that district councils are at the heart of our communities and our system of local government. They cover two thirds of the country and deliver 86 out of 137 essential local government services.

I am fortunate to come from a two-tier area, with fantastic district councils in Hambleton and Richmondshire. I have seen as I have travelled around the country visiting countless other districts that they deliver high-quality services, ensure excellent value for their local taxpayers and, as we heard from all the Members who contributed, remain incredibly close and connected to their communities. We should be very grateful for that.

I am pleased to say that this Government are determined to continue supporting district councils. We heard about the seven points in the report, but I thought I would frame my remarks by looking at the two things the District Councils’ Network highlights as the key roles of district councils: building stronger economies and providing better lives for their citizens. In discussing those two overarching roles, I hope to pick up at least the seven specific points in the report, as well as others that Members raised.

District councils are integral to the UK’s future prosperity. We talk a lot about the Budget, and my right hon. Friend the Chancellor is an important figure, but our prosperity as a nation will be built bottom-up, community by community, neighbourhood by neighbourhood and district by district. District councils have a vital role in driving economic growth in their areas—indeed, only that economic growth can pay for the vital public services that we all care so much about.

When talking about what we have done, business rates are a great place to start. The business rates retention scheme is yielding strong results; local authorities estimate that they will keep more than £2.5 billion in revenue from generating growth this year, on top of the core settlement funding we debate so much in this place. In the current year, there are 15 75% pilot pools, which were selected through a competitive bidding process. They cover 122 local authorities, 83 of which, crucially, are district councils. We heard from the hon. Member for Stroud about the importance to his area of being part of that pilot programme last year. We plan to deliver 75% retention to the entire country from next year. That will give districts even more control of the money they raise through their own economic success.

On a related theme, building stronger high streets is one of the great pressing issues of our time. This Government understand that a thriving high street is at the centre of any local community’s vibrancy and success, and it is a mark of our confidence in district councils that we have trusted districts to lead the way. We announced a £675 million high streets transformation fund in the last Budget, and, as we are seeing, districts will take the lead in applying for those funds. The changes we are making to our planning system are pivotal to giving districts the power they need to shape their local high streets and areas. District councils are also at the heart of the Government’s ambition to achieve nationwide full-fibre broadband coverage by 2033. The revised national planning policy framework requires priority to be given to full-fibre connections in existing and new developments.

While I am on the topic of growth, I want to pay tribute to the innovative work across local government to drive up efficiency and creativity. We have seen the merging of district councils in East Suffolk, West Suffolk, and Somerset West and Taunton, as district councils seize the opportunity to improve services and drive efficiencies for their communities. We heard from my hon. Friend the Member for Rugby about the creative shared working agreements that his local council has entered into, striving at every turn to provide better value for money for its residents by improving service delivery. We also heard from my hon. Friend Alberto Costa, who is no longer in his place, about the fantastic work by Harborough District Council and the efficiency it has created with its neighbour, Blaby District Council, to ensure that its taxpayers benefit from low council tax bills and high-quality public services.

Districts are well placed to innovate in that way. Given their smaller size, they can be agile and quick to respond. I see them as the entrepreneurial arm of local government, as was demonstrated in the recently announced £7.5 million local digital fund, which I was pleased to initiate and launch. Two of the successful bids for the first round of funding included a host of district councils, which will use that funding to explore ways they can use cutting-edge artificial intelligence technology and better data management in their authorities. I have repeatedly highlighted the social prescribing model of Adur and Worthing Councils as one that others should look to follow. They have been consistently at the cutting edge in driving digital transformation in local government.

Economic growth is not everything we should be focused on. As the District Councils’ Network has mentioned, creating better lives for our residents is equally important. Indeed, district councils are at the heart of helping the most vulnerable in our society to live those better lives.

We saw in the report and heard in the speech made by my hon. Friend the Member for Rugby much about the important role that district councils play in prevention. Although clearly we are not fully there yet, we have seen Government responding to that need and recognising the important role that districts can play. For example, the disabled facilities grant is part of the Government’s commitment to help older and disabled people to live more independently. We established the grant to help local authorities to fund home adaptations, keeping people in their homes. The grant has more than doubled to over £500 million this financial year. Indeed, Rugby District Council has been allocated more than £2 million since 2015. Hopefully that represents a positive step in the direction of recognising the role that districts can play in prevention. If not fully the way to a precept, it is certainly a step in the right direction.

My hon. Friend also touched on homelessness and rightly highlighted that districts are on the frontline of reducing homelessness. Following the introduction of the Homelessness Reduction Act 2017, between April and June last year more than 10,000 households secured their existing accommodation or were helped to find alternative accommodation through the new prevention and relief duties. Local authorities received an additional £72 million to carry out the new duties and are leading policy implementation through their role on the homelessness advice and support team.

We heard from the hon. Member for Oldham West and Royton about the importance of parks, and I fully agree. Parks create communities that we want to live in, and make people proud of the area that they call home. They are the green lungs of our society.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

One thing that district councils do is planning, ensuring that we have an ordered and adequate amount of housing land available and so on. Is it not also important that there should be adequate funding for enforcement? In my area we have the two excellent district councils, North Hertfordshire and East Herts, but East Herts is having to spend a lot of money tackling cases of intentional unauthorised development, particularly by Travellers. Such action is very expensive. Does my hon. Friend agree that adequate funding needs to be allowed in all settlements for such enforcement?

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

My right hon. and learned Friend makes an excellent point about an issue on which he has represented his constituents many times in this place. Just last week I responded to my hon. Friend Sir Paul Beresford in an Adjournment debate on this topic, and I highlighted that exact issue. Enforcement is important, as a recent consultation picked up.

Although this area is not my specific responsibility, the Secretary of State is considering, and I think has already committed to, making more funds available later this year—£1.3 million, I believe—to district councils through the planning delivery fund to tackle this exact issue, and I know that my colleagues in the Home Office are considering greater powers for the police and other bodies to enforce in the first place. I hope my right hon. and learned Friend knows that the Government take seriously the inconvenience and distress caused to settled communities through illegal and unauthorised encampments, and that we are committed to making improvements.

It is important that parks and green spaces are well funded. That is why the Government launched the £1 million pocket parks fund in 2016, which led to the creation of more than 80 new green spaces for local communities to enjoy. That fund had a phase 2 earlier this year, with almost 200 new pocket parks created. Districts are again are playing the lead role in that work.

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

The Minister needs to demonstrate some balance and reflect that there have been real-terms cuts in open space funding of 41% and in sports and recreation of over 70%. If the Government are committed to parks, open spaces and a quality environment, what will they do to replace the funding cut so far?

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

Funding for all green spaces and such services is not ring-fenced by central Government. It would not be right for me, sitting in Whitehall as a Minister, to dictate to every single local authority how it should prioritise its resources between social care, homelessness, parks and planning enforcement. Every area will have different priorities, and it is right that local authorities make those decisions. The Government recently unveiled a range of initiatives around parks—not just the pocket parks programme but an additional several million pounds of funding for the renovation and upkeep of parks or children’s playgrounds that have fallen into disrepair. We have established the Parks Action Group to bring people from the industry together, and we funded the Heritage Lottery Fund and the National Trust with money for their accelerator to innovate new parks models. Indeed, we are also developing a new apprenticeship standard for 21st century parks managers. On parks and green spaces the Government are firmly on the front foot, supporting local areas to ensure that their green spaces are there for their communities.

To the hon. Gentleman’s broader point, I would be the first to acknowledge that all local authorities, whether district, upper tier or unitary, have faced difficult times over the past years. They deserve enormous tribute for the fantastic job they have done in ensuring high-quality public services and public satisfaction in what they are doing at a time of constrained finances. That is thanks to their innovation and creativity, as was put so well by my hon. Friend the Member for Rugby. We all know why we were in that situation: when the Government came into office in 2010, we were left with a £100 billion deficit, and savings had to be made across government. Again, I pay tribute to those in local government for playing a starring role in helping to bring our public finances back to a sustainable position.

Housing was mentioned by many speakers. Building the homes that our communities need is another great challenge of our time, and the Government have placed trust in districts to help solve it. One key recommendation in the report was the removal of the housing revenue account borrowing cap. That was the No. 1 request from districts, and I am pleased that the Government have responded to that, which has unleashed the potential for districts to get on and build the homes we need. Similarly, the Government listened to district council calls for continuity and stability on the new homes bonus and responded by committing an additional £20 million to maintain the baseline this year, ensuring that district councils will receive more than £300 million in new homes bonus payments in 2019-20. Through all these measures, we are making every effort to create a housing market that works for everyone, and in doing so creating a country that works for everyone.

The hon. Member for Stroud mentioned uncertainty, and I acknowledge that issue. We are at the end of a spending review period, so naturally there will be some uncertainty as one set of programmes comes to an end and we wait for the spending review for certainty about what will replace them. The Government recognise the role that incentivising districts and authorities more generally to build houses has played in helping to get the number of new homes up to its highest in more than a decade. There were more than 220,000 last year, and I am sure that at this moment my hon. Friend the Minister for Housing is considering how best we can continue to incentivise local authorities in the new spending review. I am always committed to providing certainty as early as possible for councils of all stripes so that they can make the long-term plans that we have heard are so important.

It is worth dwelling for a minute on housing. I visited the constituency of my hon. Friend the Member for Rugby to see the fantastic work of his local council, replacing old high-rise blocks and improving the stock of houses for social rent. As my hon. Friend said, the council deserves credit for being on the front foot, forward thinking and keen to get on and provide the homes that our young people, and indeed all our communities, need.

I thank my hon. Friend for calling the debate on this vital issue. On my list of seven things, the one I have not touched on is freedom and flexibility. Perhaps this goes to the heart of the tension between the Government and the Opposition on how much to trust local government to get on with it. I am firmly and instinctively a localist. I want to be able to give and devolve powers down to the lowest possible level. It is good for our democracy and for our civic society if decisions are taken closer to the people they affect. I will be arguing where I can during the spending review process for greater freedoms and flexibilities for all local authorities. Indeed, at every meeting and engagement I go to, I ask local councillors, whether they are from parish or town councils all the way up to big metropolitan devolved mayoral administrations, for the ideas they have that I can debate, kick around with the team and put into the mix when we come to the spending review.

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

It is part of the nature of this place that we can be mischievous at times, but let us not be under any illusion: this tension is not caused by trust in local government. We all respect the role that councillors play and we trust them to know what is best for their area. Fundamentally, this is about the sustainability of local council finance and the historical local tax bases that inform an entirely devolved financial model. That is the only tension—this is not about trust; it is about financial sustainability.

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

I thank the hon. Gentleman, and I will now take an intervention from my right hon. and learned Friend.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

Does the Minister agree that freedom and flexibility, particularly in housing, can provide settings for housing estates that fit the local area? Hertfordshire has a lot of garden conurbations—Welwyn garden city, Letchworth garden city, and so on—and we try to create settings for future buildings that include those garden features where possible. Other parts of the country also do their thing well, and over the past 30 years, housing settings—particularly public housing, but also more generally—have improved hugely, and that is down to the offices of district councils.

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

I firmly agree with my right hon. and learned Friend. Planning and housing can be contentious in local areas, but one way to relieve that tension is to ensure that local communities feel that they are shaping the developments taking place around them. I saw that when I visited my right hon. and learned Friend’s constituency, and his point is well made.

The hon. Member for Oldham West and Royton asked the Government to be radical. They have been radical by introducing neighbourhood planning. They have devolved planning power to local communities, often at parish or town level, so that that community can create its own neighbourhood plan, supported financially by incentive payments over the last few years. That plan is then given significant and strong legal weight in the planning process, which puts local communities, at a small level, in control of their destinies on the ground. That is central Government sitting here in Whitehall, being radical, and trusting and empowering local communities to construct the housing that they need and think appropriate for their areas.

I can debate this issue with the hon. Gentleman, but we must recognise that there are two sides to this coin. If one argues for more freedom, flexibility and trust in local government, one must also believe that local governments are able to shape their own destinies. It is no good saying that local governments are not able to sustain themselves and require constant handouts from central Government, yet also saying that they should be empowered to do everything they want. If central Government are shovelling money around the system, national politicians will always rightly be in charge of that system of redistribution. The more that money is raised locally, the more that local government will have the right to say, “Let us do things the way we want. You do not have the right to dictate to us what we do because you do not provide us with our funds.” There will of course be differences in the abilities of different areas to raise funds, and there will always be some element of redistribution, but local areas cannot be considered completely static entities with no ability to be creative, dynamic and improve their financial sustainability.

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

If the Minister is arguing in favour of growing the local tax base, we are entirely in agreement. If local authorities can demonstrate that through their actions they have grown the local economy, and therefore the local tax base, we should discuss how they benefit from that success. That is not the same, however, as the historical inherited tax base that many local authorities rely on for their funding, which includes the housing stock and business rate base. We need to separate out the two things. We need fair funding to ensure that public services are properly and sustainably funded, and a proper incentive for local authorities to grow the local economy and tax base.

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

I am pleased to say that that is exactly what the Government are doing. The fair funding review is a blank sheet of paper on which we can consider the relative needs of local areas. It is bottom up, and driven analytically and empirically by the evidence, so that we figure out the right element of need for each local area, and then add a system of redistribution to ensure that funding gets to the right place. I am pleased the hon. Gentleman supports the incentive mechanism. An argument I hear a lot—I think I have also heard it from him, so I am glad if I misheard it previously—is when councils say that they have no ability to grow and will therefore need more handouts. I would take issue with that. Yes, the starting bases may be different, but that does not mean that areas cannot look creatively and entrepreneurially at how to create growth and generate resources for their local community. I believe in growth and driving prosperity locally, because I think that is the only sustainable way to pay for public services. Whether money comes from national or local government, it will come only if the economy is growing and generating tax revenue, and that is why I am keen to focus the conversation on driving economic growth.

This has been an excellent debate, and I was glad to hear all the contributions on the importance of district councils. Funding is important, and the big point is the elimination of the negative revenue support grant—I am not entirely sure that the hon. Member for Oldham West and Royton supported that when we unveiled it in the local government finance process. That is worth almost £153 million to the local government sector. District councils were big beneficiaries of the Government ensuring their commitment that the business rates baseline would not change over that period. I am glad that the Government were able to meet that big ask, which benefited 140 shire districts.

We all agree about the vital role of our district councils, their connection with communities and proximity to those affected by their decisions, and the importance of those decisions in ensuring that communities enjoy stronger local economies and better lives. It is my pleasure to represent district councils for the Government. I pay tribute to everything they do, and will continue to champion them for as long as I have this role.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 10:36 am, 1st May 2019

The debate has focused mostly on finance and funding, but it has been a valuable opportunity to consider the important role that district councils play in communities, and the important functions that they deliver. I am grateful to colleagues who spoke about the roles of their district councils and some of that innovative work, and to Jim McMahon for his reference to the neighbourhood services that district councils provide. It seems that there is a benefit to the delay between asking for a debate and securing it, because it gave the Government time to respond to many of the issues raised, and I am pleased they have taken those points on board.

I was interested in the Minister’s emphasis on stronger economies and the role of district councils in building those economies and developing high streets. I am also delighted that he took on board the bit about better lives. This is not always about finance and pounds and pence; it is about lifestyles and the benefits that councils can bring to the lives of individual residents. I am grateful to the Minister for his remarks, and for the opportunity, once again, to highlight the important role played by district councils.

Question put and agreed to.

Resolved,

That this House
has considered district council finances.

Sitting suspended.