The pre-Budget report stated that Sir Michael’s report would be published around the time of the Budget 2007. In developing the White Paper, the Government took full account of his work to date on the future role and function of local government. That included in particular his discussion paper on the future role and function of local government, national prosperity, local choice and civic engagement, which was published in May last year.
May I thank my hon. Friend for his response and ask him to confirm that, while Sir Michael Lyons is due to report in March and further legislation may be required at that time, it is the Government’s current intention, on the back of the White Paper, to increase the amount of funding that councils receive that is not ring-fenced? Will the Minister confirm that he will increase the sums pooled in local area agreements?
I thank my hon. Friend for that important question, which gives me the opportunity to confirm that that is the case. The Government’s policy is to have a presumption against ring-fencing in funding. May I tell the House through you, Mr. Speaker, that this year the local area agreements will receive £520 million of pooled money and that that will rise to up to £1.5 billion in the financial year 2007-08, so I can confirm that the answer to the question is yes.
When the Government report on that White Paper, will they include a new local business tax?
I think that the hon. Gentleman is referring to Sir Michael Lyons report rather than the White Paper. I appreciate the importance of his question. The answer to that question is that neither I nor the Government know what Sir Michael is going to report on that matter. Of course the distribution of non-domestic rates is a hugely important part of local government funding, contributing around £17.5 billion this year, so we await his report with interest.
I am sure that my hon. Friend will agree that if Sir Michael’s report is to be a success, it will have to find ways of ensuring that local authorities can raise more of the money that they spend. It is also important that it finds a way of dealing with the perversity of gearing in local government finance, and a way of giving local authorities incentives to consider favourably planning applications for business and commercial developments. Is not the easiest way to do that simply to denationalise the business rate and to give control of the rate back to local authorities?
I am aware of my hon. Friend's long-standing advocacy of that point. I note that he said it was the easiest way; he did not say that it was easy. It would be best if I were not drawn on that matter. Suffice it to say that the Government have introduced the local authority business growth incentives scheme that incentivises and rewards local authorities that achieve a growth in the number of businesses created, or indeed a slowdown if it is in a negative area. That scheme will be distributing some £1.5 billion. That is real money from which local authorities are benefiting.
Last night, the Minister said that the Lyons’ review had to be delayed until after the Local Government and Public Involvement in Health Bill to deal with form and function first, but after the publication of the Lyons interim review Sir Michael made it clear that he had views about devolution and fewer targets, and he warned against another massive restructuring, so what is it in the Lyons review that the Government are trying to hide?
I was as confused by that question as I was by the hon. Lady’s contribution to last night’s debate. I repeat what I said: it makes perfect sense—to me it is common sense, and I think that the Opposition are trying to find ways to oppose for the sake of opposing—to have the White Paper and the Bill on local government functions before looking at financial proposals and any legislation that might be produced, because if that is required, it will have to be introduced in the next parliamentary Session.
In his report of last May, Sir Michael Lyons clearly stated his views about political boundaries being redrawn. That has nothing to do with finance, but everything to do with form and function. In the interests of common sense, will the Government now give an assurance that Sir Michael will be asked to give evidence to the Bill Committee, as requested?
I cannot give that guarantee. With respect, I think that the hon. Lady is rather confused about what her own policy is. The Opposition have asked for a permissive regime that would allow local authorities to put forward proposals for restructuring, where they wish to do so. The deadline for initial proposals is the end of the current week, and I suspect that there will be proposals from local authorities of all types and all political colours from across the country. Some of them will be Conservative and some will not, and I await all the proposals with interest.
Central and local government have an agreed formula to distribute grant to local authorities. Not all councils receive the grant that that formula dictates. Can the Minister give an assurance that at the end of the next comprehensive spending review all councils will receive the agreed level of grant?
No, I cannot guarantee that. My hon. Friend again raises that important point on behalf of his four-star council. To be fair, it is a point that has been raised by Members of various parties. It concerns authorities that would receive more money if the Government had not put in a floor to protect those authorities that would lose significant amounts quickly if we had not put in that damping effect. The Government’s position is that we retain damping to protect those authorities, but as we move into the next financial settlement, which will be for a three-year period from April 2008 onwards, we will review decisions in the light of that important announcement.
The Minister has just repeated what he said in yesterday’s debate, which is that he thinks that it is an advantage to Members that we are considering his Bill prior to the Lyons report. It is my understanding that that view is not shared by Sir Michael himself, nor by many in the local government family who find it astonishing that we are being expected to take one set of decisions without being aware of what the Government intend to do in respect of another set. Can the Minister say exactly what he thinks the advantage is in our dealing with the Bill in the dark without the Lyons report; and can he give us an assurance that when the Lyons report is published he will take quick action to abolish the council tax and to repatriate the uniform business rate to local councils?
I strongly advise the hon. Gentleman who speaks for the Liberal Democrats seriously to revise his policy on business rates. At present, £17.5 billion is redistributed through the non-domestic rating system, as opposed to £3.335 billion through the remainder of the revenue support grant—RSG. Of that £17.5 billion, some four or five councils contribute almost 10 per cent. The redistributive effect of the national non-domestic rates—NNDR—in the absence of the dedicated schools budget from the RSG renders his policy one that would significantly damage the poorer areas of this country. Therefore I cannot give him the guarantee that he asks for.
When considering the Lyons review findings, can my hon. Friend look at better developing ways to ensure that those—sometimes not insubstantial—areas of the country that have pockets of deprivation and real need but which are located in local authorities that are considered to be affluent do not miss out on the additional funding that they need and deserve?
I commend my hon. Friend for raising again a problem that one of the local authorities in his constituency faces. Members of different parties point to wards or sub-ward areas that have poverty and deprivation that are not recognised in either the neighbourhood renewal fund or, it is argued, the RSG—although it is, of course, weighted within the RSG. I cannot give my hon. Friend the commitment that such changes will be made in the current financial period, but I do give the commitment that I will look at it for the future spending review period.