Local Government Finance (England) — House of Commons, 2016-02-10
Topic: Housing
Gregory David Clark (Conservative, Centre-right): I am going to make some progress, but I will give way to the Chairman of the Communities and Local Government Committee in a few moments. Another important provision of the settlement is the continuation of the new homes bonus. It had not been guaranteed that the existing scheme would continue through the spending review period. I believe that the bonus has been a valuable source of funding for councils and a spur to much-needed house building, so I am very happy that the scheme will continue, subject to the changes on which I am consulting The settlement provides flexibility for councils with a record of keeping costs low by permitting a de minimis £5 a year council tax increase without requiring the cost of a referendum. We will consult on plans to permit well-run planning departments to increase their fees by, at most, the rate of inflation, as long as such income is used to decrease the existing cross-subsidy of the planning function by other council tax payers. Importantly, the settlement makes it clear that as revenue support grant declines, no council will have to make a contribution to other councils in either 2017-18 or 2018-19—something that was considered to be unfair in the provisional settlement by certain respondents Let me say a few words about the reductions in revenue support grant over the spending review period. As I have said, we are moving from one world to another; from a world in which the Government grant accounted for nearly 80% of local government expenditure in 2010 to one in which, by 2020, only 5% of local government spending power will come from the revenue support grant. In the same period, with the implementation of 100% business rates retention, the proportion of council spending power from local sources—council tax and business rates—will grow The reason for the change is not just financial. A council that is almost entirely dependent on central Government will, consciously or unconsciously, end up looking to central Government to be told what to do. Of course, since time immemorial, Governments have attached strings to the money they give out. My excellent predecessor, my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles), abolished 4,700 targets, measures and indicators to which every council in the country had to subjugate itself to obtain revenue to provide services for its residents That is no way for the proud towns, cities, counties and districts of this country to be governed. Places, many with a history as long and distinctive as our country itself, should not be reduced to complying meekly with Whitehall’s presumptuous demands. That is why a shift to funding from the people and businesses that councils exist to represent and serve, rather than all eyes being fixed on London, is so vital Our councils have been the strongest campaigners for this long overdue change, but in the consultation period that followed the statement on the provisional settlement, councils and colleagues made the compelling case that the transition to this new world needs to be sensibly managed and that the first two years of the settlement would pose particular challenges.