John Healey
MP for Rawmarsh and Conisbrough · Labour · United Kingdom
“Mr Spock, I think some would say, Mr Speaker! My hon. Friend is right. Despite global conflicts, trade tensions and rising threats in the world, which are pushing up inflation, bearing down on growth and pushing up borrowing costs, the UK economy is demonstrating huge resilience.”
“The Prime Minister and I have been clear that we must cut the costs of welfare. On levels of taxation, we had a period of Conservative Government, with low growth and high debt. They crashed the economy with the mini-Budget, and we had levels of taxation that were putting pressure on business, adding to the cost of living.”
“The hon. Lady is talking to the person who led the work to establish a defence and security partnership with the European Union and bilateral agreements with other countries, on which we now build both our economic strength and our national security strength. On the question of the Budget, I ask the hon.”
“Since day one in the job, the Prime Minister and I have been in lockstep in our determination to meet Britain’s fiscal rules. This is the bedrock on which we build good growth and help give a bit of breathing space to families and businesses.”
“May I start by paying tribute to my predecessor, my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves)? I am proud to have been a member of a Government with the first female Chancellor in 700 years.”
“My hon. Friend speaks up very strongly for his local area. He is right about the importance of pubs, social clubs and live venues, and about the importance of the 20% cut that we announced in July. These are the things that make the places where we live the places that we also love.”
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“I have not been accused of being a playground bully before, but I am glad to welcome the hon. Lady to the Liberal Front Bench for the first time in our dealings on local government. I am not clear whether she is against council tax capping—”
“Finally, for some time there has been a system in central Government such that if any Department places an extra responsibility or burden on local authorities to deliver services or to carry out functions they have not previously undertaken, it is the responsibility of that Department fully to fund them. It is my job as Minister for Local Government—whether or not I act as a playground bully—to ensure that other Departments fully fund any extra responsibilities they place on councils. That is precisely what we do at the moment.”
“Most local councils have coped well over the last year, but it is clear that all local councils will have to do more this year to step up their drive to deliver their services more efficiently, as well as bringing in what may be necessary to support people through this difficult time. On council tax and housing benefit, the hon. Lady is right that part of the consequence of the economic downturn is a bigger demand on front-line service staff who are trying to deal with and support people through the claims process. That is why we have allocated local councils an extra £45 million for that purpose.”
“The hon. Lady confirms that she is against council tax capping but, combined with the increases in Government funding for local government funding, it is part of the reason why we have seen the lowest council tax rises ever in five out of the past six years. The hon. Lady is against council tax capping, but she also wants us to declare well in advance what the level of cap will be. The effect of that would be that many councils would set their council tax up to that level. That is not a good way of dealing with the issue or of protecting council tax payers. The hon. Lady is right about the pressures on local authorities. Like the Government, local government faces a demand for services as well as a reduction in some of its income streams.”
“I have heard what my hon. Friend has said. It is clear that things in Bury have gone badly since Labour stopped running the council. From what he has told the House this afternoon, it is also clear that the council is looking for some soft targets to make easy cost cuts, which is in contrast to what many other councils are doing. They are giving priority to trying to protect and in some cases improve the services that people most need and, in particular, they are stepping up services and support for young people in our community. I am disappointed to hear that my hon. Friend’s council is not following suit.”
“After that we will assess the extent to which we may need to proceed, with the options I set out to the House, having started a process that does not impose a cap today but could in the end lead to that for Derbyshire and Surrey police authorities. If the right hon. Gentleman and other Derbyshire Members wish to make representations to my hon. Friend and me, we will consider having a meeting to hear them.”
“No, I will not, but I will tell the House that Derbyshire police authority is not just getting the 2.5 per cent. rise that all police authorities are guaranteed by the floor that my hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing is putting in place for funding. Instead, the authority is getting a 3.2 per cent. increase this year, which does not even take into account more than £14 million in specific grants and other funding that my hon. Friend has decided Derbyshire also needs to maintain its police services. Derbyshire will have the chance to lay out its case. If the authority wishes, it can do so in person to me and my hon. Friend.”
“Friend makes and if she and either of her colleagues who represent the other two Stoke constituencies wish formally to see me or my fellow Ministers about the issue, we will happily set up a meeting and look at such representations as she may want to make.”
“I know how fiercely my hon. Friend feels about the issue and how much she is concerned about the services needed by many of the most vulnerable people in our community and in her city of Stoke. May I make three points? First, we have put in place a three-year funding deal for councils eligible for supporting people money. In part, that is to give those councils certainty about the income they will receive over that period so that they can manage their budgets better. Secondly, we have determined the amount of money for supporting people in Stoke in precisely the same way as for other areas. Thirdly, I am conscious of the case my hon.”
“I shall write to the hon. Gentleman, who has been reading too many lurid and badly based articles about local government pension schemes. First, there is a legislative and regulatory constraint on local government pension fund deficits being passed on to council tax payers. Secondly, from the beginning of the current financial year, starting last year, the reforms I have put in place in the local government pension scheme mean that employees are paying more and employers’—in other words, taxpayers’—contributions are capped. Beyond that, it is not right to use private sector pension scheme formulae as a comparison with the position of local government pension schemes. They are regulated differently and use different financial accounting methods. It is like trying to compare apples and pears.”
“I visited the area several weeks ago to see for myself the innovation, the new services, and the serious way in which the council is going about not just managing the financial pressures that it is under, but making sure that it can improve services for people right across Slough.”
“The short answer to my hon. Friend is yes. Partly prompted by the case that she has made so assiduously in recent years, we now have a very detailed programme to improve population and migration statistics. We will make sure that those improvements take place, so that for the next spending review period, any decisions on local government funding, or other public sector funding that draws on those statistics, can be based on the improved population and migration statistics. She is right about the quality of her Labour council, which has a new leader, Rob Anderson.”
“Gentleman wishes to make representations to me about the funding for his council in the third year of the three-year settlement, I will of course see him at the appropriate time.”
“I think that I can help in two ways. First, I can help by setting out, as I have done already, the funding that the hon. Gentleman’s council, and other councils, can expect from central Government for the full three years of this settlement period. That will mean that they know where they stand, and can plan and manage for that period. Secondly, I point out that the regional improvement efficiency partnerships are in place. They are led by local government experts and specialists in the field. They have the sort of expertise from which his council may well benefit, as it prepares to manage its services this year and plan ahead for next year. I will ensure that the regional partnership gets in touch with his chief executive and offers what help it can, as the council looks ahead to next year. If the hon.”
“We do not, at present, collect that information council by council, but we publish annually the reserves that local councils have in total. The last figures that we published put the figure at almost £14 billion. That is clearly part of the financial calculation and budget planning undertaken by all local councils. Particularly during this period of economic pressure, it makes sense for councils to look hard at the level of their reserves. Having sufficient reserves is necessary if there is to be prudential management, but the high level of reserves held by some councils might, in this period of pressure, be put to good use to maintain services and to keep council tax pressures down.”
“The hon. Gentleman has been around long enough to understand that we have a formula, which we consult on and debate in this House, for distributing funding to local councils. It applies equally across the country. He will also be aware that this Government introduced a system of floors. Without it, some of the councils that he may have in mind would, by rights, get less than they do. That floor is funded by taking the money off the rises for other authorities. He asks whether the residents of Cambridgeshire are aware of that; I ask him whether they are aware that his party plans, if it gets into power, to slash grants to local councils by £240 million from next month. That would, at a stroke, put an extra 1 per cent. on their council tax.”
“My hon. Friend is right, in that what we have heard from the Conservative party is a con. It is a con in two ways. First, it is a con to suggest that it will be a freeze for all councils, as has been promised, because the freeze will apply only to those that join the scheme. Secondly, it is a con to suggest that somehow that will give more power and decisions to the local area, because the constraints will still be set at the centre. He asked me whether I am considering seriously some of the principles of council tax. I know that he follows the subject, and is a source of fresh policy thinking almost without compare in this House. I am seriously considering a set of suggestions, and am looking very carefully at the ideas that he has submitted. I have a good deal of interest in them, and look forward to discussing them with him.”
“For the benefit of the House, LGR is local government reorganisation. Members should not make the mistake of accepting the hon. Gentleman’s description of the way in which it is being handled. The short answer to his question is no, because from the outset of the process, we made it clear that if local authorities were going to play a part, they should cover the costs. We also made it clear that those costs should not be excessive. Clearly, councils that choose to use the legal process to try to influence the policy process should account for those costs to local residents. Finally, the important LGR process started with proposals that we received from councils, including councils within his area—”
“Including councils within his area, the county of Norfolk. We will bring the process to a conclusion as soon as we can, because there are important questions at stake concerning the future of local governance and local services for people in his county.”
“I have to concede to the House that I do not know a great deal about council tax in Scotland; I have my hands full looking after council tax in England. However, I note the points that my hon. Friend makes, including the fact that what was advocated by the Administration there has been put on ice, and is not, despite being a manifesto undertaking, likely to be put into practice.”
“I will look into the electoral ward arrangements raised by the hon. Gentleman. The bigger picture in Wiltshire is of a new council that will be up and running from next week. It will make massive savings for the people of Wiltshire, and we will see over the coming months the advantage of having one level of local councils, rather than two, because that will give stronger leadership to his county, as well as better services to his residents.”
“The hon. Gentleman is not talking about council tax—he is talking about business rates. He would have done better to have been in the Chamber yesterday, rather than today, when we debated that. I will write to him and explain how the business rate system works.”
“I understand why the hon. Gentleman might want to have a dry run of a full debate we will have on this subject next week, but does he not accept that this is not, as he is trying to say, something new for ports? Does he not accept that although 500 or so businesses in ports are newly listed and liable to pay business rates, three times that number were already paying business rates separately before this period? Will he not also accept that what is new is the unprecedented period of eight years to pay these backdated, legally established tax liabilities, which we are proposing and he is opposing?”
“It is not new; it is an established part of the ratings system—it has been so in this period, and it was in the last period. More firms outside the ports are in the same position, because that is the way the rates system works, and the period we are allowing for payment will also help those businesses, especially in the current economic circumstances. There is nothing special about the position of these ports businesses, except that they are the subject of a review that the Valuation Office Agency has undertaken. It arguably could have done so more quickly, and it has conceded that point.”
“As the Prime Minister and the Chancellor have made clear—this is where the real difference between the two sides of this House lies—we will take whatever action is needed to see us through the credit crunch. We will do what it takes, as we have done, to prevent the —[Interruption.]”
“This is an important and timely debate on business rate taxation. It is also an interesting one, because what we have just heard from the hon. Member for Bromley and Chislehurst (Robert Neill), the Conservative Front-Bench spokesman, is a strong case for a fiscal stimulus and tax support. On that basis, I am glad that he is part of what is now an inter-party international consensus that knows that Government action is needed to slow the global downturn, to speed up the chances of recovery and to regulate better the international financial system for the future. I am glad that he also seems to know that Governments must act to help families and firms through this recession, even if—I have to say this—the shadow Chancellor and his party’s leader do not appreciate that.”
“I beg to move an amendment, to leave out from “House” to the end of the Question and add: “notes that the Government has recognised the problems that many businesses face and is committed to do all it can to help them through these testing times; recognises the action the Government has taken to give targeted support to businesses including a £20 billion working capital scheme, an aim to pay Government suppliers within 10 days, a cut in the main rate of value added tax to 15 per cent., a deferral in the increase in the small companies’ rate of corporation tax, free business health checks, more than £100 million towards debt advice, the HM Revenue and Customs Time to Pay scheme benefiting 93,000 firms by deferring £1.6 billion in tax, and extension of Empty Property Relief; believes the Government’s commitment to the annual Retail Price Index cap means that there has been no real terms increase in business rates since 1990; welcomes the Small Business Rate Relief scheme benefiting 392,000 businesses by £260 million in 2007-08; recognises that funding of almost £1 billion since 2005-06 has been provided through the Local Authority Business Growth Incentive scheme; further supports fairness in the system that ensures that properties are revalued every five years with transitional relief to phase in significant increases in bills from revaluation; and acknowledges help provided for businesses, including in ports, receiving unexpected and significant backdated rates bills by introducing an unprecedented eight years to pay, as part of a package of measures that ensures through the rates system there is certainly, fairness and appropriate relief for businesses.”.”
“Similarly, I should mention the help that we have given to try to keep companies in business, people in work and families in their homes, and the action that we are now taking to try to ensure a proper international system of regulation in order to cut the risks of such a meltdown in the global financial system in the future.”
“I was trying to take the chuntering from the Opposition Front-Bench team seriously, Mr. Deputy Speaker. I am not sure how they can say that no action has been taken and everything is simply spin, given that we stepped in to prevent the collapse of the banking system. We did so because it is important to savers, pensioners, householders and mortgage payers—all of us—and businesses that we have a banking system in which banks do not go bust and which gets back as quickly as possible to the proper of business of banking: lending to support the British economy, lending to support firms and lending to support families.”
“If the business is faced with such a business tax demand, it should have been paying business taxes a good deal earlier than 2005. I would also say that businesses in the same port—possibly ones in direct competition with the one that the hon. Gentleman mentions—have been paying business taxes on their own account during that period. Finally, I would say that the Opposition should not vote down the measures that we will seek to put in place next week that will give that firm and others in a similar position eight years to pay the backdated business rates that they are now legally liable to pay.”
“Well, that is another argument from the Opposition for a fiscal stimulus. It also overlooks the fact that we have put in place the VAT cut, and the Office for National Statistics suggests that 70 per cent. of the cut has been passed through into prices. Other independent commentators have said that it is the equivalent of a 1 per cent. interest cut. The hon. Gentleman also overlooks the fact that in the pre-Budget report the Chancellor said that he would not proceed with the increase in the small companies rate that was scheduled.”
“It is not what I say: the Office for National Statistics has said that the VAT reduction has been passed through to consumers in some 70 per cent. of prices. The independent Institute for Fiscal Studies says that the VAT cut has had the same effect as a 1 per cent. interest rate cut. Goldman Sachs has said: “The VAT cut appears to have had a clear positive impact.””
“As the House would expect, we are in close contact with businesses and have detailed discussions with those from all sectors and all parts of the country. I am conscious of the particular pressures in which business rates have played a part. I said earlier that the Prime Minister and Chancellor have made it clear that during this period of unprecedented economic downturn and pressure, we are prepared to take whatever action is needed to try help business and the economy through it.”
“When one is running a business, advance knowledge of a potentially significant element of overheads does not mean that the liability to pay changes, but that the ability to plan and to try to manage those pressures is improved.”
“My diary secretary hates it when I come to these debates. I will not meet the hon. Gentleman’s constituent, but I will meet the hon. Gentleman if he wants to run through the details of the case with his constituent beforehand. Having heard only what the hon. Gentleman has outlined, it is difficult for me to comment on that situation. It might be a product of the end of the transitional relief, which has dampened the increases in the business rates that his constituent was liable to pay for the past four years. We legislated for that scheme and put it in place before the 2005 ratings list came into operation, so that his constituent and any other of the 1.7 million businesses in Britain would know—because of that provision and other stable features in the system—their likely rates liability for each of the five years of the ratings list.”
“This debate is in danger of foreshadowing a debate that we are likely to have in the Chamber next week. In general terms, I do not accept that the separate listing and liability for business rates for some of those businesses came completely out of the blue for three reasons. First, we made it clear well before 2005 that we intended to end the system of prescription. Secondly, a large number—more than 1,500—of businesses based in ports were already paying business rates on their own account and not through the port operator before the listing period started. Thirdly, although I accept that communication from the Valuation Office Agency could and should have been better and that it should have been distributed more quickly, information about the ports review was disseminated widely across the sector from an early stage in the process.”
“The LABGI scheme—to use a rather ugly and awkward acronym—was a three-year scheme from the outset. The hon. Member for Bromley and Chislehurst misleads the House when he says that the amount for the scheme has been slashed— [ Interruption. ]”
“The money is a reward and a recognition, yes, but it is also an encouragement and an incentive to local authorities to do more to support their business base, and to bring jobs and long-term prosperity to their local economy. That is the sort of investment and activity that we wish to encourage local authorities to increase, but the Government—and especially my Department—have a principle to which we hold quite strongly. We believe that, where possible, we should allow local authorities to take decisions for themselves about how best to spend their money and about what is best for their area.”
“Thank you, Mr. Deputy Speaker. I do not wish to accuse the hon. Member for Bromley and Chislehurst of misleading the House, so of course I withdraw that word. However, he is mistaken if he describes it as a scheme that has had its funding from the Treasury slashed. I say that because I was the Treasury Minister responsible for introducing it. I devised and funded it as a three-year scheme: over the three years, almost £1 billion has been made available as a reward to local authorities that played a part in helping businesses in their area to grow. My hon. Friend the Member for Bassetlaw (John Mann) makes a really important point.”
“The present system is central to providing the revenues that support those local government services—such as education, housing, waste, social services and planning—that benefit us all. This year, business rates should raise around £20 billion—all of which, I point out to the hon. Member for Wealden (Mr. Hendry), is redistributed to local authorities, rather than going into central coffers or the tax pool.”
“I can understand the reaction of business people in Bassetlaw. If what my hon. Friend says about his council’s use of the money is correct, that places it out of step with the mainstream of councils that receive LAGBI money. Most councils see the reason for the money and understand its value, and they have been able to use it to support local jobs and businesses, particularly during this difficult time when the economy is on a downturn and businesses are under new pressure. We are conscious of the pressures on business at present, and of the pressures that business rates can produce, but I remind the House that rating systems of one type or another have been in place in this country for more than 400 years.”
“I am interested in the common cause that the hon. Gentleman is making with the Liberal Front-Bench team. Setting the business rate nationally is a way of making sure that the revenues available are redistributed fairly, particularly to poorer areas. It also ensures that the system itself is fair in that, when a local economy or area has relatively few businesses, the ones that do exist are not disadvantaged by having to pay a higher rate. The business rate system we have today is a way of ensuring in a number of ways—not just that one—that there is a fair system of taxation for all businesses in all areas.”
“That has meant that since 1997 the proportion of local government funding from business rates has dropped from about 25 to 21 per cent. Before anyone from the Opposition jumps to their feet, it is not the case that the proportion of the council tax contribution to council funding has risen in a mirror image. Investment from central Government has increased above inflation every year since 1997, but the proportion of local government funding from council tax has been roughly the same over the past decade.”
“If a property is in a better location or provides better amenities, the rent that someone may be willing to pay will be greater and the rateable value and the rates that flow from that are, therefore, also greater. The hon. Member for Bromley and Chislehurst talked about the multiplier. He is right: the actual amount a business pays in business rates is calculated as a function of both the rateable value and the multiplier. Contrary to the assertion that through the business rate system, business is a cash cow for Government funding, or even local government funding, business rates rise only by the rate of inflation. Each year since 1990, and consistently since 1997, the rates have risen only in line with inflation.”
“I shall make sure that my hon. Friends at the Treasury take that as a Budget representation from my hon. Friend. I am glad he welcomes the change that we shall be making from April this year, which means that there will be a higher threshold and thus no new liability to pay on probably about 70 per cent. of empty properties. He urges us to review the operation of the scheme and we shall of course do so once it is in place. I turn again briefly to the questions about the business rate system as I think it would be useful for the House to understand how we have tried to design it so that it is fairer for businesses—I have mentioned the benefit of a nationally set rate in that regard. The system is based on the hypothetical rate that an occupant would pay to use a property.”
“I have to say that the Conservative party opposed the legislation that introduced that relief.”
“As the system stands, that would be the effect on the business rates multiplier for the following year, if RPI is negative in September. The multiplier is capped each year by RPI—inflation. Through the cap and by setting rateable values for a five-year period, we can give businesses certainty about the level of their business rate liability. In addition, where we think there is a strong case, we have been ready to introduce reliefs to make the system fairer still. There are now mandatory reliefs for charities and community amateur sports clubs of at least 80 per cent., which last year were worth almost £800 million to those bodies. We introduced rural rates relief, which has been available since 1998. Pubs and post offices in rural areas can get 50 per cent. rate relief.”
“The hon. Gentleman shakes his head, but his party voted against the Second Reading and the Third Reading of the legislation that brought in that measure. However, he is, I am pleased to say, a strong advocate for that relief, as is the Conservative party now. According to the last figures, that relief is worth about £260 million to nearly 400,000 small businesses. So there is relief in the business rates system, particularly for small firms, where there is a good, principled case for it.”
“I shall personally forward a copy of the Official Report to the Chancellor tomorrow, and I shall highlight the hon. Gentleman’s contribution with my doughty yellow marker pen, which I have here. Let me mention revaluation, because the Conservative Front-Bench spokesman raised the subject. It is a major part of the rating system—and, I would argue, of the fairness in that system. That fairness comes from the regular five-yearly revaluations.”
“The next revaluation is due to take effect from 1 April 2010. The revaluation will not raise extra business rates revenue; that is an important protection for all businesses. Some rates bills will rise and some will fall after the revaluation, but the average national rates bill for businesses will change only by inflation. For those rate payers who face big increases at the 2010 revaluation, we will introduce transitional arrangements, so that we phase in those increases. We plan to consult later this year on the design of those transitional arrangements, which will substantially benefit business in the new rating list period.”