Stephen Williams Speech in the House of Commons on Local Government Finance

On Wednesday 12th February, Bristol West MP, Stephen Williams, in his capacity as Minsiter for Communities, made a speech in the House of Commons on Local Government Finance. His comments have been re-produced below.

The Government came to power with the pressing need to balance the nation's books, and that meant reductions in all areas of Government spending, and local government has had to pay its fair share. Over the last few years the Government have had to make some tough decisions about public finances-tough decisions that the last Government shied away from in their last two years in office. The crash, remember, was in 2008.

But those tough decisions are now paying dividends. The national deficit has been reduced by a third, unemployment has fallen and employment is at an all time high, so it is vital that we stick to the disciplined course that we have set for ourselves. Like every part of the public sector, local government has had to pay its share to reduce that deficit and get the nation's finances back on a stable footing. If I can characterise the comments made by most Labour Members, with some exceptions, this has all led to total unfairness to all of their cities and constituencies.

This Government have decided to protect the national health service budget in real terms. This Government have protected the schools budget in cash terms. This Government have put huge amounts of money behind children who, like me, were on free school meals. All of that money will benefit Salford, Liverpool, Sheffield and other places. We have also taken the poorest in society who are working out of the income tax threshold. We have raised the national minimum wage. We have raised the apprentice wage. We have raised the state pension. We have built more social houses than the last Government, and this Government will be the first in 30 years to leave office with more affordable and social housing in the housing stock. Together, we are building a stronger economy and a fairer society, in which everyone can get on in life.

Mr Betts: The Minister mentioned Sheffield and fairness. Given that he is a Liberal Democrat, I should be interested to hear whether he thinks it fair for Wokingham to have the same spending power as Sheffield.

Stephen Williams: Many Members have contrasted the spending power of cities with that of southern authorities. However, it is absolutely clear that the spending power of authorities such as Newcastle is far in excess of that of many other authorities with similar responsibilities but entirely different demographics. It is completely wrong to say that unfairness is built into the system, given that the top 10% of the most deprived authorities in the country are the authorities with the most power to spend on their citizens.

We are moving to an entirely new system of local government finance. I accept that there is more to be done and that there is a need for reform in the system, but I am sure that that reform will come when the economy has fully recovered.

Reference has been made to the amounts that are raised through council tax, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), was criticised for his "language of begging bowl". As someone who, when I was a council opposition leader in Bristol, went on deputations to local government Ministers in both the other parties, let me put it this way: local government had a supplicant relationship with central Government, and that is what this Government are trying to change. We are putting more incentives in the system for local authorities to build more houses. The business rates retention will encourage local economic growth: for the first time, local authorities will retain more of the benefit from economic growth in their own areas rather than handing 100% of it to the people in the Treasury, so that they can decide how much should be distributed around the country according to their own formulas and principles.

Another of the new incentives is the new homes bonus. I am sure that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), will be pleased that his authority in Bradford is to receive £2 million in new homes bonus. Leeds will receive £3 million in new homes bonus, and my city of Bristol will receive £2.2 million.

The other major criticism that we have heard today is that some parts of the country have lost out at the expense of others, either as a result of this settlement or over a long period. However, the settlement represents a fair deal for every part of the country-north and south, district and county, city and shire. As I said a few moments ago to the Chairman of the Select Committee, councils have an average spending power of £2,089 per household, and the average spending power reduction will be just 2.9% in the forthcoming year. Moreover, protection is built into the system for the most deprived areas of the country, which are the most dependent on grant.

We have also recognised that services are sometimes more difficult and expensive to deliver in rural areas. Many Members, particularly those on the Government Benches, recognised the real difficulty that rural authorities experience in delivering services to their constituents. I certainly recognise that poverty is found in all parts of the country. It is not necessarily concentrated only in city-centre constituencies such as mine; it is found in Barnstaple, in St Austell, and in many other rural and sparsely populated parts of the country. That is why we have already set aside £9.5 million-£1 million more than last year-to help the authorities in the most sparsely populated rural areas.

I thank my hon. Friend the Member for North Devon (Sir Nick Harvey)-there were many Devonian speakers in the debate-for saying that we ought to go a little further. In fact, today we have announced a significant amount of extra money: £2 million. That means an extra £44,000 for North Devon district council. My hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) said that the average per authority was £30,000, but Cornwall's unitary authority will have just over half a million pounds extra.

Local authorities need to protect taxpayers by keeping their council tax down. For many of our constituents, the council tax bill represents a huge part of their monthly outgoings. In many cases, it is much more significant than other utility bills, so to denigrate the Government's policy of encouraging local authorities to freeze council tax is to miss a major point of what the Opposition call the cost of living crisis. If they do not recognise that council tax is part of the cost of living pressure that all our constituents face, they are living in another world.

It is no surprise to find that Labour Members live in another world. Under the previous Government, council tax more than doubled, pushing a typical bill up to £120 a month for hard-working people and pensioners. This Government, however, have done everything possible to protect families from further increases. Over the past three years, council tax bills have been cut by 10% in real terms across England, and we are encouraging local authorities to continue to freeze their council tax. We will further incentivise them to do that not only by offering them a grant but by putting that grant into the baseline so that can have certainty for future years.

Already, 137 local authorities have confirmed that they intend to reduce or freeze their council tax bills, including-as my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) pointed out-almost all the Liberal Democrat local authorities. They include the local authorities led by directly elected mayors in Watford and Bedford, and the Liberal Democrats in my own city of Bristol want our city's mayor to follow their example.

The referendum principle has been mentioned by many speakers today. The hon. Member for Sheffield South East criticised the Government for taking time to announce what the referendum threshold should be. We confirmed on 5 February that it will remain at 2%, which was the assumption that the local authorities were working on when planning their budgets. The hon. Gentleman was around during the last Parliament, and I must gently remind him that the previous Government frequently capped local authority council tax increases without announcing the cap until March, after the local authorities had set their budgets and started to prepare the bills to pop through people's letter boxes. We have certainly improved on that situation.

There are many things that local authorities can do to balance their books in an efficient way. The Government are encouraging such efficiencies, and there is still plenty of scope. For instance, the Liberal Democrat council in Kingston-upon-Thames is investing in a combined heat and power system that will benefit its council buildings and private sector buildings, saving money and carbon at the same time. Cambridge council is protecting and enhancing local shops, which is good for local residents, good for tourists and good for local economic growth. The process is now being incentivised by the retention of business rates.

Mr Graham Stuart: Further to the speech that my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) made earlier, will the Minister confirm or deny that the Liberal Democrats stood in the way of a fairer deal for rural areas?

Stephen Williams: I am not privy to every conversation that takes place, as my hon. Friend knows. I can assure him, however, that possibly the most powerful person in the Government with his hands on the purse strings from our side of the coalition, the Chief Secretary to the Treasury, is most certainly a friend of rural areas. He has pushed for the freeze in fuel duty, which is another example of the Government listening to the cries for help from rural communities. There is a danger, in these debates, that we see matters purely in the context of the silo of our own Department. I agree entirely with the right hon. Member for Salford and Eccles (Hazel Blears)-the former Secretary of State for this Department-that it is a mistake for Governments to do that, and we have not done it. Across the piece, we are doing our bit to help rural areas, including through freezing fuel duty. Had Labour's plans been put into effect, rural motoring would have cost much more.

There is more that local government can do to hold down costs. An example can be seen in the tri-borough initiative in west London, involving Hammersmith and Fulham, Kensington and Chelsea, and Westminster councils. The leader of Kensington and Chelsea council told me recently that the initiative was on track to save £40 million by combining back office and management services.

In conclusion, this coalition Government are all about building a stronger economy and a fairer society in order to help people to get on in life by giving them more power to decide what happens in their community and supporting their local area in ways that will allow their community to thrive and prosper. There is no doubt that some difficult decisions have had to be made about public finances, and councils cannot be exempted from that process. But councils have taken important steps towards modernising and transforming their services, and I certainly pay tribute, on behalf of all of my colleagues, to the efforts that many councils have made to live within their difficult budgets. I also think we must all acknowledge that more could be done to reduce the costs of delivering their services while keeping council tax down, and I have every confidence that they will rise to the challenge.

The full speech can be found on Hansard, here.

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