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Local Authorities: Business Rate Retention

Volume 619: debated on Monday 16 January 2017

Councils have long campaigned for 100% business rate retention. Last week, we introduced the Local Government Finance Bill, which will establish the framework for the reform system. We will continue to work closely with local government during the passage of the legislation to shape the detail of the reforms.

I welcome the decision that Cornwall will be a pilot area for the retention of business rates. However, business rates in Cornwall are low, particularly when compared with urban areas. Will the Secretary of State reassure the people of Cornwall that Cornwall Council will not lose out on any funding as a result of the changes?

I am pleased that Cornwall will be one of the areas to pilot some elements of the new 100% business rate retention system. The pilot will help us to develop the system and make it work for all local authorities, including rural authorities. We have been clear in setting up the system that we will ensure redistribution between councils, so that areas do not lose out just because they collect less in local business rates.

As you know, Mr Speaker, Buckinghamshire is the entrepreneurial heart of England. What assurances can the Secretary of State give the people of Wycombe that the needs-based review and the new business rate system will result in rebalanced service funding to reflect better economic growth in entrepreneurial areas such as ours?

I have visited the area with my hon. Friend several times, and he is right to call it entrepreneurial. Under the new business rates retention system, the redistribution of resources will continue, with baselines set through the fair funding review, so that all authorities are treated fairly.

The Secretary of State will be aware that the Select Committee on Communities and Local Government was supportive in principle of the Government’s proposals when it considered this issue, but it wants a lot of details. A major question of detail that needs resolution is this: future demand for adult social care is likely to grow far more quickly than the growth in business rates, so does he recognise that, in addition to retaining 100% of business rates, local authorities will need additional funding for adult social care? Will he agree to a review to consider that?

I am sure that the Chair of the Communities and Local Government Committee welcomes last month’s announcement of additional resources for adult social care, but he quite rightly points to the need for longer-term reform—something that the Government are taking seriously.

The Government’s plans to devolve attendance allowance as part of business rates retention has caused great distress to the over 1 million elderly people who rely on it to maintain independence and remain in their own homes. Will the Secretary of State reassure them today that the reform will not in any way strip them of that vital allowance?

The hon. Lady highlights the fact that councils will have an additional £12.5 billion a year when the 100% retention reform takes place. More responsibilities need to be pushed down to councils as a result. She asks what might make up those responsibilities. We have not yet made a decision, but we will do so in due course.

In two-tier local government, it is the district council that allocates land for important commercial development. Will the Secretary of State ensure that districts are appropriately awarded for taking often difficult decisions?

My hon. Friend makes a good point about districts and their role in promoting business and development. We introduced the Local Government Finance Bill last week. I am sure that he will welcome the fact that councils outside London can also promote business development districts.

The Government’s autumn statement showed an increase in business rates income to the Treasury of £2.4 billion in 2017-18, but that remains unallocated. Will the Secretary of State protect local people from massive council tax increases by investing that money in social care and ending the precept, as suggested in October by Unison, the largest trade union supporting careworkers?

The hon. Lady will be fully aware that this country had a huge budget deficit back in 2010, thanks to the previous Labour Government. All areas of Government have had to make a contribution to dealing with that, including local government. I am sure that she will welcome the changes to adult social care that were announced last month.

Does the new system allow local authorities any discretion with regard to business rates levied on hospitals that, like Southampton general hospital, face a rather large increase in business rates following a revaluation?

I can tell my right hon. Friend that the new system does allow some discretion to councils, but I do not think it will apply to hospitals. It will apply to businesses, and only in one direction, but as he has made the point, I will take a further look.

Further to the question asked by my hon. Friend the Member for Sheffield South East (Mr Betts), when the Government committed to letting local authorities keep 100% of business rate income, they promised, alongside that, commensurate further cuts to their funding from Whitehall. Given that the Local Government Association estimates that councils are already underfunded for their legal responsibilities, including social care, to the tune of almost £6 billion, when will the Secretary of State tell the House what further cuts in funding the people of England can expect their local services to suffer?

As we have publicly announced the numbers, the hon. Gentleman should be aware that 97% of councils have accepted the four-year budget deal and have come forward with efficiency offerings. In return, the Government have guaranteed the funding. That does not mask the fact that, of course, so many councils find it challenging to deal with their settlement, but many councils are able to deal with it. He should look at that carefully.