GOVERNMENT plans to change the way councils are funded would penalise the most vulnerable, says Stalybridge and Hyde MP Jonathan Reynolds.
The Local Government Finance Bill sets out changes to the way business rates are distributed and in the way council tax is collected and subsidised.
The Government has claimed that the changes would help to reduce the deficit and encourage local economic growth. But there are widespread concerns that the measures in the Bill will do little to encourage growth – while punishing the most vulnerable living in areas where growth has stalled and unemployment is rising.
Last night (Tuesday 10 January) MP Jonathan Reynolds outlined his own concerns, as the Local Government Finance Bill received its Second Reading in the House of Commons.
Commenting on the Bill, Mr Reynolds – who was formerly an elected member of Tameside Council – said: "Any measures that would encourage local economic growth are to be welcomed – but this Bill is deeply flawed.
"There is nothing to suggest these measures will directly encourage business growth – but there are strong indications that vulnerable residents in areas of low growth and high unemployment will suffer.
"Currently funds collected through business rates are re-allocated to areas to reflect the level of local need and deprivation. But the new system would financially reward areas where business was booming and where councils were able to increase the amount business rates generated in their area. And that means areas where economic growth has faltered, where deprivation I high and where unemployment is increasing will ultimately suffer.
"This is likely to lead to a growing divide between ‘winners’ and ‘losers’ – risking some areas spiralling into decline while others continue to grow."
Mr Reynolds believes the changes would increase the unfairness that is already inherent in Government spending allocations. And he believes rewarding economic growth risks the entrenching of geographical inequalities – including an increasingly prominent north-south divide.
These measures, says Mr Reynolds, also fail to acknowledge that the actions taken by councils are not the sole determinant of economic growth in an area .
"A new road or improved transport links can significantly impact on growth – but that is a reflection of national policy rather than the action of local authorities," he said.
"Implementing a system that would mean hard-working and innovative councils would be penalised when external factors come in to play would be wrong. The Government may feel they are justified in recognising economic growth in this way - but if they are rewarding areas for circumstances beyond their control this is no more than a lottery."