Monday 20 February 2017
Communities and Local Government
Local Government Finance
I have today laid before the House, the report on Local Government Finance (England) 2017-18, which represents the annual local government finance settlement for local authorities in England.
I would like to thank all colleagues in the House, and council leaders and officials, who contributed to the consultation after the provisional settlement was published before Christmas. Representations from nearly 200 organisations or individuals have been carefully considered before finalising the settlement.
In 2010 we inherited the largest deficit in our peacetime history. As we continue to bring that down, local government, which still accounts for nearly a quarter of public spending despite the savings delivered since 2010, must continue to play its part.
At the same time, local residents rightly continue to expect excellent public services. I commend all councils for how they are getting on with the job. Public satisfaction with local services has been maintained, and councils are engaged in substantial efforts to modernise, transform local services, and reduce waste so that frontline services can be protected.
The 2017-18 local government finance settlement supports councils to continue in that regard, and progresses funding reforms to make councils more self-sufficient.
We remain committed to increasing funding certainty for local government. In total, local government spends more than £120 billion a year and the 2015 Spending Review and 2016-17 settlement delivered a flat-cash settlement for local government, providing four year funding allocations for the first time. The settlement being published today is the second year of the four year offer which was accepted by 97% of councils. To enshrine this commitment to stability in law the Local Government Finance Bill establishes a legal framework for multi-year settlements.
Councils are able to use this increased funding certainty to continue reforming the way they work and become more efficient, both in back-office functions and front line service delivery. Building on the £508 million savings already delivered from shared service arrangements, councils are using improved digital technology, new delivery models and innovative partnerships to deliver savings across local government.
We listened to the unanimous view that we must prioritise spending on adult social care services that councils provide to our elderly and vulnerable citizens. The Spending Review put in place up to £3.5 billion of additional funding for adult social care by 2019-20. Recognising the immediate challenges in the care market facing many councils next year, this settlement repurposes £240 million of money which was previously directed to local authorities via the New Homes Bonus to create a new adult social care support grant next year. It also grants councils extra flexibility to raise the adult social care precept by up to 3% next year and the year after.
These measures make available almost £900 million of additional funding for adult social care over the next two years, bringing the total dedicated funding available for adult social care to £7.6 billion over the four-year settlement period.
But more money is not the only answer. We will bring forward reforms to provide a sustainable market that works for everyone who needs social care. And I welcome the consensus across both sides of the House that every area should move towards the integration of health and social care services by 2020, so that it feels like one service.
Council tax referendum principles
We are committed to keeping council tax down, and will maintain referendum principles to protect hard-working taxpayers from rising bills. Council tax in England has fallen by 9% in real terms from the levels left behind by Labour in 2010, and is expected to be lower in real terms in 2019-20 than it was in 2010-11.
This year, in addition to the further flexibility on the Adult Social Care Precept, we are proposing a core council tax principle of 2% for principal authorities, or £5—whichever is greater—for all shire district councils, and for Police and Crime Commissioners in the lowest quartile.
100% business rates retention
To reduce local government’s dependence on Central Government for funding—long campaigned for by councils—we have announced that by the end of this Parliament, local government will keep 100% of the income raised locally through business rates. Councils will take on new responsibilities to be funded from this additional income—estimated to be around £12.5 billion —as Central Government grants are phased out, and to ensure councils with less business rates do not lose out, there will continue to be redistributions between authorities.
The Local Government Finance Bill, currently before Parliament, provides the legislative framework for these reforms. This will allow us to continue to work closely with interested parties over the coming months on the more detailed aspects of reforms.
A consultation has already been conducted. The Government response to that announced that, in the reformed system, Revenue Support Grant, Rural Services Delivery Grant, the Public Health Grant and the Greater London Authority Transport Grant will be funded through retained business rates. Taken together these account for around half of the additional retained business rates that we estimate will be available to councils. We will continue to engage with local government on the remaining responsibilities to be devolved as part of these reforms but it has already been confirmed that the devolution of Attendance Allowance funding is no longer being considered as part of the Business Rates Retention reforms.
A further consultation has been published seeking views on many of the important aspects of the new system—for example, how growth in business rates can best be rewarded, and how the system can help authorities to manage and share risk. Responses to that consultation are invited by 3 May.
Pilots of these reforms will take place from April 2017 in Liverpool, Greater Manchester, West Midlands, West of England, Cornwall and Greater London. We have also confirmed that we are interested in building on the existing pilot scheme and will be inviting all councils to apply to participate in piloting aspects of 100% Business Rates Retention from April 2018. We will be publishing more information about this process shortly.
Reforms to Local Government Finance, based around 100% business rates retention offer a bold and innovative response to the twin challenges of promoting economic growth and securing more self-sufficient and sustainable local government. They will help determine the role, purpose and means of delivery for local government in the years ahead. The 2017-18 Local Government Finance Settlement provides the financial stability authorities need as they transition towards the reformed system in 2019-20; these longer-term reforms will ensure the councils people rely on for their local services are both sustainable, and more self-sufficient.
The consultation outcome can be found at: https://www.gov.uk/government/consultations/self-sufficient-local-government-100-business-rates-retention.
The further open consultation can be found at:
Foreign and Commonwealth Office
Foreign Affairs Council: 6 February 2017
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the Foreign Affairs Council on 6 February. The Foreign Affairs Council was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Federica Mogherini. The meeting was held in Brussels.
Foreign Affairs Council
A provisional report of the meeting and conclusions adopted can be found at:
Agenda items included Libya, Ukraine, Egypt and the Middle East Peace Process. Ms Mogherini briefed Foreign Ministers on the Serbia/Kosovo dialogue and on planning for a conference on Syria to be held in Brussels in the spring.
The Council discussed the situation in Libya and adopted conclusions. The EU remains committed to an inclusive political settlement under the framework of the Libyan political agreement, with Libyan ownership of the political process and encouragement to all Libyan actors to engage constructively. There can be no military solution to the conflict. The EU reaffirmed its continued support for the UN Support Mission in Libya and welcomed engagement by Libya’s neighbours and regional organisations. Ministers also discussed the need to stem irregular migration along the central Mediterranean route.
Foreign Ministers discussed the recent escalation in violence in eastern Ukraine and the resulting humanitarian situation around the town of Avdiivka. They also discussed how the EU could increase support for the full implementation of the Minsk agreements. Ministers agreed on the need for continued strong support for Ukraine’s reform agenda, which is crucial to strengthen Ukraine’s resilience, and welcomed the progress Ukraine has made on reform to date.
Foreign Ministers discussed the economic and political challenges facing Egypt, including the human rights situation, and agreed on the need for closer co-operation on these issues. Ministers also agreed that working more closely with Egypt on regional issues is a priority, given Egypt’s status as a strategic partner in countering terrorism and tackling illegal migration.
Foreign Ministers discussed issues relating to the middle east peace process. The Council discussed possible timing for the next EU-Israel Association Council and agreed to revert to the issue. Member states expressed concern about the increase in Israel’s settlement building and the new settlement legislation passed by the Israeli Knesset.
Ministers agreed without discussion a number of measures:
The Council updated the information related to 21 persons and one entity subject to restrictive measures against the Democratic Republic of the Congo.
The Council took note of the annual progress report on the implementation of the European
Union strategy against the proliferation of weapons of mass destruction (WMD).
The Council took note of the annual report on the implementation of the European Union strategy to combat the illicit accumulation and trafficking of small arms and light weapons and their ammunition —actions in 2015.
The Council approved the conclusion of an agreement aimed at continuing the International Science and Technology Centre (ISTC).
Independent Reviewer of Terrorism Legislation
I am pleased to announce that I am appointing Max Hill QC as the new Independent Reviewer of Terrorism Legislation.
Mr Hill has been a QC for nine years and has extensive experience both defending and prosecuting complex cases involving terrorism, homicide, violent crime, high value fraud and corporate crime. He successfully prosecuted the 21/7 bombers, and he appeared in the inquest into the 7/7 bombings. He also sits as a Recorder at the Old Bailey.
Mr Hill will take up this role from 1 March 2017. He takes over from David Anderson QC, who has served as Independent Reviewer with great distinction since 2011, and to whom I am extremely grateful for the significant contribution he has made.
Work and Pensions
Defined Benefit Occupational Pension Schemes
Today the Government are publishing a Green Paper “Security and Sustainability in Defined Benefit Pension Schemes”. This paper also forms part of the Government response to the Work and Pensions Select Committee report into defined benefit pension schemes. I would like to thank the Committee for its report.
Defined benefit schemes are an important pillar of the UK economy and our pensions system. In order to generate the funds needed to pay the pensions of retired workers, around £1.5 trillion is invested by nearly 6,000 schemes. The Government are committed to a system that works for employers, schemes and the 11 million people who are in a defined benefit scheme.
While the Government do not believe that there is any systemic issues within the sector, it is clear that experiences differ from scheme to scheme. The Government recognise that recent years have been particularly challenging for some employers providing defined benefit pensions and the trustees responsible for running these schemes.
The Green Paper looks at a range of issues that have been raised by various stakeholders, for example, whether the Pensions Regulator’s powers should be extended to improve member protection. It focuses on four key areas—funding and investment, scheme affordability, member protection and consolidation, so that we can start to build consensus on whether we may want to reform the current system.
The paper relates only to private sector defined benefit schemes and is not concerned with other types of pension provision, such as public service pension schemes or defined contribution schemes.
The Government want to hear from all those with an interest in defined benefit schemes, in particular from scheme members themselves. The consultation will close on 14 May 2017.