Cities and Local Government Devolution Bill [Lords] — House of Commons, 2015-11-17
Topic: Government Operations
Clive James Charles Betts (Labour, Centre-left): I will try to get back on to the straight and narrow, Mrs Main My point is that we need a time of reflection, with a discussion between Government, local government and this House about the framework for the constitutional relationships between the centre and local authorities of whatever kind, including combined authorities, so that we can look at the balance of powers and perhaps put down some markers or mechanisms for ensuring that the devolution we all support today is not taken back tomorrow. We need something of that kind. A constitutional convention has been mentioned—the Government may not like those words, but we need some mechanism to enable that to happen My second point is about fiscal devolution. My hon. Friend the Member for Croydon North (Mr Reed) quoted the report from the Select Committee in the last Parliament, and the hon. Member for Carlisle (John Stevenson) was a member of the Committee. We produced the report on an all-party basis. We followed the London Finance Commission, which was promoted by the Mayor of London and supported by the London boroughs. By and large, we agreed the report, albeit with some embellishments, with the London Finance Commission, and we had support from the core cities, but it was almost dismissed by the Government as an irrelevancy—something that they did not want to pursue I am pleased that the Government are looking at the total localisation of business rates. How they do that will be critical, including dealing with the issue of rewarding councils that get more development in their areas and at the same time protecting those areas where development is not as easy to achieve. Achieving some element of redistribution in the mechanism will be key. Nevertheless, the Government have accepted the need for some more fiscal devolution in principle. They now need to consider how it can be right that any increase in the one tax over which local government has total control—the council tax—is restricted by the need for a referendum. No other tax raised by central Government requires a referendum on any increase. I did not agree with the previous Government’s policy on council tax capping—I refused to vote for that on several occasions, as it is a very centralist policy The tax also has not been revalued for 25 years. That is nonsense. The council tax is the one tax over which local government has some degree of control, but it does not control the bands. There must be some flexibility there to recognise the extraordinary difference between amount of tax paid and the value of houses in the top and bottom bands. The difference in the values of the houses is much wider than the amount of council tax paid. Local councils need more flexibility and the ability to control that. As the London Finance Commission said, and the Select Committee agreed, let us also look at stamp duty and other property taxes. Let us consider giving local councils freedom to set business rates. I know that the Government want to bring in some freedoms, but they could go wider. Could local government have a right to be allocated a certain percentage of income tax Those are all ideas. All I am saying to the Government is that once this wave of devolution is going through, with cross-party support and local councils entering into it and putting in bids, can we at least have some indication that they will step back at some point and have a serious look at wider fiscal devolution? Ultimately, simply giving to local councils the power to spend money that has been handed out from the centre is not real devolution at all. It is power to spend the money the Chancellor gives out. What councils need for real devolution is the greater power to raise that money in the first place.