Local Government Finance Bill — House of Commons, 2017-01-23
Topic: Government Operations
James Stephen Heappey (Conservative, Centre-right): I welcome the proposed devolution of business rates, so in that sense I support the Bill enthusiastically. I have no doubt that the retention of business rates will encourage local councils to be more entrepreneurial and rejuvenate economic development departments in city and county halls. In the long term, I am sure that the new focus on local economic development, and the Government’s industrial strategy, with its focus on growth in all parts of the UK, will deliver self-sustaining local authorities that deliver high-quality public services in all parts of the UK. But we are not there yet. In fact, we are nowhere near Per capita funding for predominantly rural local authorities is significantly below that for predominantly urban authority areas. Why? Because that is just the way it has always been. There is no rhyme or reason to it; it is simply a legacy of old funding formulae, so rural areas have continued to be at a disadvantage. That is iniquitous, and it needs to be corrected. Instead, under the settlement announced, the gap will widen further. Last year, rural MPs on both sides of the House won a concession for extra money in the rural services delivery grant that effectively ensured that last year’s cuts were shared equally between urban and rural areas, but that was just a sticking plaster that did not change the settlement for this year, or the two that follow. However, I remain ever hopeful that, like last year, some additional money can be found to provide some extra rural services delivery grant to ensure that, again, the cuts fall fairly and that rural residents are not left at a disadvantage. I am clear, though, that that will be just another sticking plaster, and that what local authorities need more than anything is certainty—certainty to borrow, invest and budget in the long term so that local public services are on a more stable footing. That means that the current review of local government funding needs to be accelerated, and accelerated urgently Furthermore, we should be bold in our ambition for the scale of that review. A review of local government funding is needed that fully recognises the costs of rurality; the costs of an ageing population; the other costs faced by local authorities around the country in both rural areas and urban areas; the costs of communities in which English is predominantly spoken as a second language; and the costs of pockets of high deprivation both in urban and rural areas. All those costs must be understood. We need to put in place a new funding formula for local government that is entirely transparent and entirely fair for all our constituents, whether we represent rural or urban areas In Somerset, we are already paying extra on our council tax to protect ourselves from flooding. We will pay extra on our council tax for adult social care. Our cost of living is rising fast, because fuel costs are going up, which impacts on rural areas more than on urban areas. In return, Somerset residents are getting their bins collected less often, the libraries are open less, youth clubs have lost their funding and bus routes are being lost Somerset County Council has done a great job running into this headwind, not least because it does so while carrying the enormous debt left by the Liberal Democrats when they were last in charge at county hall. That £20 million a year interest and debt repayment is a very useful reminder of why Somerset is better off under Conservative control. We should be clear that the alchemy of the Conservative administration at county hall in Taunton—just as in other county halls across the country—cannot go on forever. There must be a review that not only delivers the devolution of business rates, but, in the short and medium terms, ensures that we continue to redistribute money from London and the south-east to the rest of the UK so that local authorities in rural areas, and in the regions of the United Kingdom, can be given a financial settlement that allows them to continue to deliver high-quality local public services with the certainty that is required so that they can borrow, plan and budget for the long term I agree with the principle of this Bill. I absolutely agree with the devolution of business rates to local authorities. It is a great idea to give local authorities the opportunity to be more entrepreneurial, to invest in their economic development departments and to reap that return by growing on their patch the number of businesses paying rates, which allows them to do even more by way of public services. Clearly, it is the long-term future, but we should make no mistake: that system will not work immediately on its introduction. What we need in the interim is a full review of local government funding so that our county councils, district councils and councils everywhere else in the UK can operate with some certainty. We do not have to have this year-by-year cut to local public services that annoys our constituents and that means we have such full mailbags.