Lord Fuller (Con)

I was mid-flow. I was making the case that, in the early days of business rates retention and pooling, there was an exceptionally compelling case to co-operate. Even if we gave away a little of our own growth as a local authority—I was the leader—the pot was large enough that we did not lose out. However, ever since, the incentive to grow through business rates retention and, in particular, pooling has become weaker and less compelling. It has been harder to demonstrate the benefits of growth to a sceptical population. The trouble is that, through this instrument, it is not just that the train tracks have narrowed and the bid offer spread has become more constrained; a series of disincentives have made it significantly less attractive. I understand why there has to be a reset, but the cliff edge of the reset means that those councils that have worked hard to do the right thing are seeing that growth be snatched away. That is a pretty powerful disincentive to do the right thing. Increasing redistribution means that, however well you do above the baseline, more and more gets taken away. That is a further disincentive. Now, there is an additional factor that weighs against the co-operation that makes everybody better off: the tweaks. It is more than a tweak, in fact; it is a tilting of the playing field against those who are growing hard and in favour of the indices of multiple deprivation. I do not deny that some areas are poorer than others but, when you take into account each of these detractors from the incentive to grow, you find out that there are rewards for sitting back and not pushing the envelope. Those councils that can just sit back and wait for the others to do well are the undeserved beneficiaries. This is not to say that there should not be any redistribution—I am not making that case at all—but through this instrument and, in fairness, others over the past three or four years, we are getting to a situation where, if nobody is really incentivised to do the right thing, why should anybody do the right thing? Why should any council leader go out on a limb, as I did, to sell the benefits of growth and explain to residents and businesses, “If you come with me on this one, you’ll pay less council tax, the economy will be stronger, there’ll be more jobs”, and so on? There is no taste in nothing. Diluting the incentives to do the right thing even more, as this instrument does, means that we will all end up in a rather tasteless situation that achieves neither what the Government crave nor what this nation deserves.