Lord Jamieson (Con)

My Lords, first, I draw the Committee’s attention to my interest as a councillor in central Bedfordshire. I thank the Minister for introducing these regulations. I agree with the two previous speakers that it is positive that there is a three-year settlement. This instrument forms part of a wider set of reforms to the business rates retention system ahead of the 2026 reset. It makes a number of technical changes to how the system operates in practice, particularly in relation to the levy on growth, the safety net and the treatment of compensation for reliefs and multiplier changes. However, as the noble Baroness, Lady Pinnock, and my noble friend Lord Fuller have said, these regulations will have an impact on growth and incentives. We recognise the Government’s stated intentions both to realign local government funding with need and to ensure that the system continues to function smoothly as wider reforms are introduced, but those objectives cannot come at the expense of undermining incentives for local economic growth and for high-performing councils. It is the Government’s stated intention to promote growth; I query how this instrument fits with that intention. These regulations replace the existing levy cap with a system of marginal rates on growth. In many cases, the effect will be that local authorities retain less of the proceeds of the very development they are being asked to support. That raises a fundamental question: if councils see a diminishing or even negative financial return from growth, why would they take on the costs and complexities that often come with approving new development? As my noble friend Lord Fuller said, new development is not free; you may need to invest in infrastructure or provide incentives for someone to come to your area. There are also social costs in the wider sense, such as busier roads, the loss of green fields, busier doctors, a lack of GP surgeries and so on. What is the incentive for local councils and councillors to promote growth if there is no financial recompense that they can use to invest in their communities? Local authorities are not passive actors in this system. They make those difficult decisions concerning planning, infrastructure and local services. If the link between growth and local benefit is weakened, the Government risk tilting the system away from enterprise and towards dependency on redistribution. I ask the Minister directly: what assessment has been made of the impact of these changes on councils’ willingness to bring forward new development? Can the Minister set out more clearly which types of authorities stand to lose out under these changes? What assessment has been made of the impact on local financial planning and rates collection as a result? This largely mirrors what the noble Baroness, Lady Pinnock, raised around the idea of an impact assessment.