Local Government Finance Bill

The hon. Gentleman has almost taken the words out of my mouth. Given the Government's commitment to the big society and to empowering the organisations about which he has expressed concern, removing discretionary awards would be controversial, and—given that they account for only a small proportion of the business rates that are collected—of little use. I hope that we can be given some clarification about why the Bill fails to provide for any adjustment in the growth calculation to remove the negative effect on valuation appeals. I do not wish to sound too negative myself. Obviously we are trying to make the legislation better, and I think that the principle of allowing local authorities to retain a greater proportion of the business rates that they generate in their areas is a positive step. Nevertheless, the detailed proposals relating to RPI increases, revaluation and physical growth fail to offer the incentives for growth in high-yield areas for which we had all hoped, and I fear that they may result in excessive penalties for such areas. I realise that Opposition Members may view the issue from the point of view of relatively low-yield areas, but I think there is a risk that high-yield areas will not receive benefits for themselves and that, as a consequence, the Exchequer will not receive them either. Encouraging economic growth at any level is critical to the national economy. Local authorities are uniquely placed to provide incentives for growth in their areas, recognising what will work even in specific parts of a single authority area—I observe a great variance within the 6.5 square miles of my own constituency—and that creates a bedrock for the national economy. I hope that serious scrutiny will be given to the reasons for the Government's proposals, in the light of some of their potentially negative implications for areas that would be expected to generate the most significant growth. Let me take up the point made by the hon. Member for Denton and Reddish (Andrew Gwynne) about pooling. We are living in a climate in which it will become the norm. I do not wish to pre-empt discussion of a subject that I am sure will be subject to much criticism and debate on the Floor of the House in the years to come, but I suspect that there will also be a reorganisation of local government. I foresee that in particular for London. It currently has 32 local authorities as well as the City of London, and that situation may well be subject to radical reform in the near future. I hope the Minister gives serious thought to encouraging the pooling of resources. As he will know, in my area the tri-borough arrangements among the City of Westminster, Kensington and Chelsea, and Hammersmith and Fulham have worked well in a number of respect, and it is to be hoped that that continues. It is in the interests of central Government for there to be pooling, but I fear that the proposals in paragraph 9 of schedule 1 will serve to remove any form of incentive for it. I accept that there will be some additional costs, but pooling is the way forward for many local authorities and the Government should encourage it in this Bill. I am broadly in favour of the proposals, but I hope the Minister gives serious consideration to the points I have made.