I am Steve Reed, the Secretary of State for Housing, Communities and Local Government.

Because you invited me, didn’t you?

Not as far as I am aware.

Oh, right. I didn’t know. As I understood it, this was already scheduled at your invitation.

Maybe that is the reason, then. There you are.

If I wanted to do that, I would go to speak to the incoming Prime Minister rather than the august members of this Committee. He is a busy man, but I would like to think he is watching proceedings.

There is a whole swathe of things that I think are really important. As the Chair said, MHCLG has the biggest legislative programme of any Department, and it has a very broad remit. I feel that we have made progress in the 10 months that I have been in the role in a lot of those areas. The Government’s priority has been housing, and we passed the Planning and Infrastructure Bill. It was already in train when I came in, but we strengthened it to make sure that we can drive house building faster. We have the NPPF changes, which are due out imminently, following the final consultation. We have the London stimulus package as well. House building froze in London four years ago, and it needed a stimulus to get it moving again. We have that just about ready to go. We have opened and then closed bids for the first phase of the social and affordable homes programme as well, and that is going to make a huge difference, particularly judging by the level of oversubscription to those bids. House building is very important, although the progress we wanted was somewhat stalled by events in the middle east, which have had a negative impact on investment and costs. That is very significant. We have taken huge strides forward on devolution and the place agenda to get the English Devolution and Community Empowerment Bill through Parliament, putting devolution by default on the books. There is a statutory process for the right to request, and the Government will concede to devolution where mayoral authorities come forward with proposals for what should be devolved. For me, the place agenda is a very important corollary of the structural devolution. It is all well and good, and very important, to get powers out to the regions, but we need a much more accountable and responsive system, with public services and decision making directly accountable to communities and public service users, so we have inserted that. That is a developing agenda, of course, and it has much further to go right across Government. We have also been doing important work on social cohesion. I was very pleased that we got the social cohesion action plan published. It is a baseline, to be honest. There is a lot further to go, and we all see in our constituencies the huge challenges that are pulling communities apart at difficult times like this. In terms of regrets, it would be the wish to have gone further and faster in all those areas, but I don’t know what is going to happen in the reshuffle next week, any more than anyone else does. Maybe I will get that chance, and maybe it will be one of my colleagues. We will wait to see what happens.

It is not my biggest regret. There are a lot of factors influencing it that are outside the Government’s control, such as the impact of Russia’s invasion of Ukraine on the availability and cost of materials. The cost of wood, steel, cement and bricks—a lot of those materials—shot up dramatically, as did the cost of labour, particularly in London, where there has been a shortage of labour for a period of time. All of that has had an impact. Just as we saw, in the spring statement, the economy starting to recover—we had already had by that point, I think, six interest rate cuts in a row, which is a very important demand-side change and makes people more confident to go out and buy—we then had the events in the middle east and Iran, which have put dramatic pressure on energy costs and further pushed up the costs of building and stopped further anticipated interest rate cuts that were expected to happen through the course of this year. None of those things are the fault of the Government, but the Government is having to deal with them. The fact that we have about 192,000 homes built in the time since the general election—

Sorry, 392,000 homes built since the general election, which was before all the reforms I outlined to planning, regulation and the London stimulus had come through. The London stimulus, of course, is taking cost out of the system. The planning reforms, by speeding up the planning process, are taking cost out of the system. We are much more robust now with interventions in planning authorities that are not delivering the speed and quality of decision making that is required to get house building to happen at the scale that we want. In mid-June, there were nine interventions in planning authorities in one week. It is very important to get the system moving, as well. I think we have done what we can in the circumstances, but of course we all want to see more happening. I think that what has happened over the last four years means that there will be a lot of pent-up demand. People who would have moved have not, for the reasons I just outlined. It is partly about confidence in the system. There will still be families that want to upsize to a bigger home and older people who want to downsize to a different home. That demand is still there in the system and I remain confident that with the reforms we have put in place, once the global economic circumstances stabilise there is the opportunity for the house building and development sectors to really motor. I pick that up from the developers, too—it is not just me saying that.

I agree with you on the importance of this. We all put great store by the role of the Housing Ombudsman in overseeing the different sectors of housing and making sure that there is an appropriate system to seek redress and change when things are going wrong. It is very important. It is important that the Government has the right candidate available, so rather than rush things through at a more desirable pace, the Government is taking the time to get this right—

Well, Richard Blakeway remains in post until the end of the month. We will make appropriate interim arrangements following his departure. I have known Richard Blakeway a long time; he was deputy mayor for housing back when I was a borough leader in London. He is very competent, but he is completing the end of his second and final term now. We will make appropriate interim arrangements, but we want to make sure that we appoint the right person, who is able to carry that work forward, particularly with the expanded powers that the ombudsman will have. While it is regrettable that we do not have a name for you to scrutinise now, I think it is more important to get it right.

It is more important to get it right than to rush it through when we do not think it is right at this stage. Richard Blakeway has done a very important job overseeing the release of a nationwide complaint-handling code. As I said, he has long been a very powerful advocate for social housing. We will make appropriate interim arrangements; you will receive a letter from the relevant Minister about that. We will make an appointment, and that will be someone you can interview.

Many of those areas were the focus of work already under way in the Department.

I have had a meeting with Andy Burnham, where we talked through where we were up to on devolution and the development of the place agenda. He is formulating his proposals for a No. 10 in the north and exactly what will operate out of that new centre. It strikes me as very sensible to put part of the operation in the north, particularly if it is going to lead on devolution, but it will be for him to decide precisely what parts of the No. 10 apparatus operate out of Manchester and what will remain here in London. I am sure he will make proposals about that. On what we have done to support the transition beyond the meeting that I have had with him, following that meeting we provided his team with a series of briefing updates on the work of MHCLG—so not just devolution and place work, but housing, social cohesion and the other areas that we are responsible for.

I am not sure that he has announced that he is going to do that. I think we will have to wait and see exactly what he comes forward with.

He has talked about taking more, that’s right, but he has not said specifically what areas yet. That would really be for him to decide and to outline.

The Cabinet Secretary, as Minister Pennycook pointed out, has issued guidance that all Departments are to follow during the transition. That is normal—

Specifically, areas where we would be initiating new policy or spending commitments. There are a number of areas where the incoming Prime Minister would want to take a view. I have some of them here: announcements on high street funding; the overnight visitor levy, where the consultation has been under way and will be completing; and announcement of further established mayoral strategic authorities. There are some aspects of leasehold reform that will be delayed for that. I think those are the key ones. There are other smaller areas that I can write to you about if you like.

Well, the Speaker announced in the Chamber yesterday that that would happen before recess, so that is correct, yes.

I think it is appropriate in this kind of transition, which we have seen fairly frequently over the last decade, that the incoming Prime Minister should have a chance to look at significant reforms of that kind before they complete their journey through. While of course I would have wished for this to all be completed before recess, I fully appreciate, understand and support the reasons why that cannot now happen. Regarding the Representation of the People Bill, which was due to come before the Chamber today, we have the Hillsborough Bill coming forward, and that is also a very significant reform. Because of the limited time available before recess, both could not be fitted in, given that the incoming Prime Minister deserves the chance to review that legislation. In terms of scheduling, it will come back as soon as recess comes to an end, so it should not inconvenience Members particularly, or indeed those many interested parties and stakeholders outside Parliament who want to see these things progress as quickly as possible.

I do not have the detail on that one.

It is for the Prime Minister to decide how they want to structure Departments, and there are many ways that you can cut and slice this Department or other Departments. That is for the incoming Prime Minister.

I may have a view. When I was running a council, you could also cut and slice departments in different ways. My experience of doing that and then not doing that is that sometimes structural change can slow things down, and sometimes it helps to bring things together that will drive change faster. The key is to get the best possible people into the jobs and make them operate collaboratively as a team. That was my experience.

I am in danger of repeating some of the things I was saying earlier.

The NPPF is only just coming through its consultation. I wish the consultation had been quicker, because if we could have had those reforms available and in operation back in February, for instance, that would have given the sector more time to work with them. It is worth looking at the pace and speed at which consultations like that take place, but that is a requirement placed on us, not a decision of the Department. From talking to the sector, I know that when the Government came in the big issue was planning reform, legislation and regulations. They were an absolute barrier and completely out of line with what there was in comparable economies in the western world. Any developer you spoke to—I had a lot of engagement with developers in my time as a council leader and also as co-chair of the Vauxhall-Nine Elms-Battersea regeneration partnership—would tell you that it was the planning system that was the problem. The Planning and Infrastructure Act and the NPPF changes have cleared that out of the way. Planning is no longer the big barrier that it used to be. This Government—all of us; it had more or less cross-party support—can be very proud of the changes that we made through that. The issue now is much more about viability. A lot of those viability factors are things that have happened overseas and are outside our control—the Russian invasion of Ukraine or the war happening in Iran and the Gulf at the moment, and the impact on energy prices, the availability of materials and investor confidence. Those are the things holding us back. We strengthened aspects of the NPPF and the Planning and Infrastructure Act in anticipation of these things causing problems of the kind that they have. In London, where there was a particular problem for house building and development, we have the London package that I agreed with Sadiq Khan that strips a lot of cost out of the system in order to make schemes more viable and get them moving again. Where do I wish we had done more? I wish that it could have been done quicker, but that was not the fault of the Department; it was due to processes that the Department is required to follow. If there were an opportunity to review those, I would definitely want to review them.

There is also the BSR run rate: last summer, it was 11 months for new applications; today, it is about 13 weeks. That is dramatically better and it has taken a lot of cost, delay and uncertainty out of the system for developers. We are also exploring—we are in the early stages; I have been taking advice from the Department on this—the opportunity of establishing a state house builder and whether that would help us get through. In the housing sector, you see over many years that there are peaks and troughs, so a state house builder might help us to get through some of the troughs and keep the sector moving. The private sector—the market on which the sector heavily relies—would then be in a better state once we had gone through those dips. There is more work to do on that.

You are right, Chris: that is a bigger machinery of government issue rather than something that relates only to MHCLG. You saw how the new towns proposed under the Brown Administration did not go ahead. The consultation project was not followed, so they got delayed and delayed and in the end they did not happen. I was given legal advice throughout this process about the risks of the same thing happening again. We had to follow a process—one that is not defined by MHCLG—so that these new towns could get the chance to go ahead. But I share your frustration at how slow and cumbersome those consultation processes were.

It is the legislation that is in place. That legislation would need to be reformed.

Yes, there have been conversations, but they have not yet resulted in legislative change.

I think we should get as many barriers as possible out of the way. In the case of the new towns proposed under the Brown Government, environmental legislation caused the delays. However, I have never seen house building and development as an either/or with nature. In recent decades, and under the previous Government, we saw house building and development in decline and nature in decline, so it was not an either/or; both were in decline. Some of the nature reforms that this Government have already made, including the environment improvement plan, the land use framework and the nature restoration fund, mean that we can now get investment into nature and ecosystems across whole landscapes and expect to see an improvement in nature, alongside getting ahead and building more quickly so that we get the homes that we need. I think it could be a win-win, and we should be able to do both. But is there scope for further reform of the legislation? Yes, there is.

That is a consultation; there have been no decisions. It is quite legitimate to consult and seek views on something. The intention of all our reforms is to increase the volume of social and affordable homes across the system. I will give the example of the London stimulus package that I agreed with the Mayor of London. We reduced the affordability requirement in new developments from 35%, I think it was, down to 20%, with a clawback mechanism if the market increases. The reason for that was that you had a flatlining system and almost no new social homes being built in London for several years—35% of nothing is nothing. Viability, rather than planning, is now the barrier. If you make schemes more viable, 20% of something is more social and affordable homes than 35% of nothing. We did it for that reason, but we have built in a very strong clawback mechanism so that, if the market recovers and developers bringing homes to market make more profit than anticipated when the consent was agreed, more money will be taken and ploughed straight back into social housing. The point is that we can all sit there and look at spreadsheets that say we are going to build loads more social and council homes when we actually build zero, but I would much rather have real homes than numbers on a spreadsheet.

Well, it would be for exactly the same reasons. We opened the social and affordable homes programme for bids in February, and it closed in April. It was heavily over-subscribed. That is really encouraging, because it shows that the sector is ready to go. That will create the biggest increase in social and council housing in a generation. Last year, we built more new council homes in one year than in any other single year since records first began 40 years ago, so this Government are already building record numbers of council homes. In the Social Housing Bill we are reforming right to buy so that the new council homes that councils and others build will not be immediately open to right to buy and bought out of the system, which is a huge deterrent to council homes getting built. So I do not agree with your starting point that the Government is reducing the amount of council housing being built. Not only are we increasing it, but we are already seeing numbers that we have never seen built in a generation, and that will continue through the years to come.

The consultation is only just concluding, so, again, we have to wait and see when that comes through. If you speak to developers, they will tell you the benefits from that will include more homes being built. The hit from the war in the middle east has affected energy prices and caused a bit more drag in the system. I speak to developers frequently, individually and collectively, to talk about what more the Government can do to make sure we have the right context to get the homes built that this country desperately needs. They are very confident about it working.

I have just come back from the LGA, where I must have spoken to dozens of council leaders of all parties.

If you want to know if I have spoken to council leaders, you can just ask if I have spoken to council leaders and I will tell you that I have. The same applies collectively and individually at the LGA. I have regular meetings in the Department, very often focusing on house building as well. I do a lot of visits to housing development sites, often accompanied by councillors or the council leader. I was recently up in York with the council leader looking at the huge development in the city centre, which has a vast amount of development, including social housing, being built there. Yes, they will talk about the need for infrastructure to enable the homes to go forward. That is the role of Homes England, which works with those areas to make sure infrastructure, particularly road access and public transport, is in place. Some of the changes we are making in the NPPF, such as a yes by default around train stations where the public transport infrastructure is already in place—those are such obvious places to get building. We anticipate that around London about a million new homes could be built around existing railway stations where land is available to develop on, and nationally 1.8 million homes. Homes England is working on that. We have the National Housing Bank established now where developers can access up to £16 billion of investment, levering a further £50 billion of private investment in the infrastructure to enable housing to go ahead. The Government has done a lot on that.

That will be determined by the relevant transport companies and authorities as the homes get built, as Transport for London is doing with developments in south-west London, where they are looking at increasing the train frequency as the population increases. But you cannot increase the frequency of the trains if there is no train track and no train station in place already. In these cases, there is, making them very sensible places to go ahead and develop, because you do not have to wait for the infrastructure to be in place; it is already there.

We need both, is the truth of it. We came into power and inherited a housing crisis. The number of people sleeping rough on the streets had doubled since 2010, under the previous Government. The number of families living in temporary accommodation, often for years—it is very difficult to call it “temporary” when you are stuck in it for three or four years or more—had doubled as well. Young people have also been denied the opportunity that I had in my 20s to find somewhere I could afford to rent, or, in my 30s, to find the first flat that I could afford to buy. They see their life chances as not being as good as their parents’ because of that. We have a very significant undersupply of housing, and it cannot be met just through remediation, although that is certainly an area that we need to focus on as well. Existing properties that can be made appropriate for people to live in are an important part of increasing housing supply in a sustainable way, but we need to build more homes as well. The changes that we have had demographically in our country, particularly with households becoming smaller over time—happily, more people are living longer—have put significant pressure on housing supply. We have to address that through all the means available to us, but you cannot do it just through remediation and things like that.

We are currently taking advice on it. The idea is: how do you try to smooth out the peaks and troughs in the sector? When you get a deep trough, as we have had recently because of events overseas that I will not repeat again, it is then very difficult to come out of it, because we lack the skills, for instance, and the investment to make it move quickly. If we had a national house builder, could we smooth that system, make house building happen faster and stimulate the private sector? The private sector is always going to be the main volume builder, based on the model that we have had in this country for recent decades. We are looking at all the options around that.

We keep all these options under review constantly, and we have conversations with the Treasury about this. The significant reductions that we have had in interest rates since the general election have helped massively on the demand side. In fact, before the most recent incident, the war in the middle east, we had record numbers of mortgage products available from mortgage lenders. That was because they were anticipating that the changes that had already happened were going to stimulate more demand. Unfortunately, the invasion of Iran and the events that that led to in the Gulf, and the impact on energy prices and the supply of materials have had a detrimental effect that has counterbalanced that. We all hope that situation can be brought to a conclusion as quickly as possible, because the beneficial circumstances that we had in place will be able to come back. We can then take a view about what is required in terms of further stimulating demand. If you look at Help to Buy, it certainly increased demand but, because it was not targeted, it seems to have inflated prices in some areas, which counteracted the benefit of the initiative in the first place. There is no point taking action if it does not lead to any meaningful change in the end in the affordability or availability of housing. To some extent, that is what happened with Help to Buy, so it would need to be different from that, but we keep it under review. There are no decisions at the moment about what that needs to look like.

The Pride in Place programme is a very important initiative for this Government. It is £5.8 billion targeted at 284 of the poorest areas, as defined by the index of multiple deprivation. Those areas are getting up to £20 million each over a 10-year period, with decisions about how that money is invested taken by the local community through a neighbourhood board, independently chaired, engaging with local people about what they want to see. In terms of measuring success, it will be through metrics such as strengthening social cohesion, improving access to opportunities, including employment outcomes and reducing the number of people who are not in employment, education or training in those localities. But because it is local boards taking the decisions about what they want to invest in based on their assessment of the challenges facing their localities, it is going to vary from area to area in terms of what they are seeking to tackle.

The communities delivery unit in the Department is conducting ongoing monitoring of both the decision making and whether communities are being appropriately engaged. It is monitoring the outcomes and outputs of that work, which will be developing over time. That is how the monitoring is happening. The Government could have come forward and said, “Here’s the money for your locality. We want this to be done differently, because we want local communities to decide for themselves what they want to spend it on”, with the insight being that local people know best what needs to change in their own community. If we had then imposed the outcomes that we expected to see, the programme would not be operating as something that is locally controlled. This is a time when we have a huge breakdown in trust in politics, partly because of the deep regional economic inequalities that we see, the economic inequalities within community and the serial failure of big promises from Governments. Austerity was meant to fix the problems, but it did not. Brexit was meant to fix the problems, but it did not. Levelling up was meant to fix the problems, but it did not. As a result, another top-down imposed agenda was just not going to work. You can rebuild trust by showing that politicians trust people, but you have to not overly constrain them. Of course, you have to monitor what is taking place, and you need to demonstrate value for money in the way that the money is being used, but if you impose strictures right from the front, you are not giving power to those communities. That is essential to this programme, and that is why it is so different from previous programmes.

We have established something called the network for neighbourhoods, which is designed to ensure that the chairs and other leaders involved in these boards can network with each other and share best practice. The Department, with No. 10, has been facilitating that work, because it became clear quite quickly that they felt isolated. They are all developing best practice, so they can then share that across. Even though the contexts are very different, there is learning that you can take from one place and apply, as appropriate, in a different context. That is happening. Secondly, that network is also helping to build leadership within the community. Very often, very poor and held-back communities have had local leadership suppressed, rather than nurtured. As part of this, particularly through the early phase of the programme, we are seeking to develop that leadership within the community, so that they are better equipped, as the programme proceeds, to take more control over the programme and the changes it is making in their local area. That is the approach that we are taking to tackle the issues that you raise.

Because there is a limited pot of funding—£5.8 billion is significant, but it reaches only about 3% of wards in the country, and we need an offer for the other 97%. Not every area will be able to get that level of funding. As we discussed previously, we are developing a place agenda to focus on effective place-based delivery, so that areas that do not get Pride in Place funding can still get the benefits of how Pride in Place operates in those areas that do get the funding. That means focusing much more on place-based delivery, which includes place-based service integration. You get services in a locality integrating and working together better, because you get better value for money that way, as well as making them easier to access for local people. We need national Government services to be part of that, as well, not just local services. The place unit we have set up in MHCLG is intended to work with other Government Departments to ensure that they are also participating in place-based integration. There will be place-based budgeting as well. Instead of each different service having its own budget, unrelated to other areas, you can pool budgets focused on a particular outcome you want to achieve, which drives better co-operation between and across the different funding partners involved in that. That is not just the state sector; that is the third sector and the private sector as well, so there is real collaborative working there. The third element is more directly empowering service users and citizens, so that they have a bigger say over what the services seek to achieve. Different commissioning models give different outcomes in that way. I am particularly attracted by outcomes-focused, user-led commissioning models, which are used quite widely in parts of local government. They support groups with a particular need, to identify the outcome they want to achieve, the intervention to achieve it and the provider of that intervention, if they are not satisfied with the current one. If you add that to what I just said about place-based delivery, you get a very different model of local public service reform that is much more directly accountable and responsive to local people. It creates the benefits of place-based working for areas that will not be receiving Pride in Place funding.

I will try.

It is just about ready, Chair. I signed off what I assume was the final draft very recently but, because of other circumstances, we have not been able to get it out. I fully anticipate that it will be available at the very, very beginning of September. The point of the long-term housing strategy is to give certainty to the sector. The sector can see what we are doing to give them certainty, with the changes and reforms around leasehold, social housing, the £39 billion social and affordable homes programme, now opened to initial bids, planning reforms, the NPPF and other areas we have talked about.

It is helpful to have everything pulled together in a single document, but less convenient for people is that they can see what we are doing in those separate areas, through the policies that we are enacting and the reforms we are bringing forward. It is just about ready, and I am sorry that we have not been able to publish it already. Again, it is right that an incoming Prime Minister should get a chance to give it the once-over. It is so close to being completed that I expect you will have it by the beginning of September.

The approaches that will drive it will be contained in that. We have been having conversations with Homes England about those bids and we want to confirm those as quickly as possible.

It will not have any negative impact on getting the house building going.

It would be for the new Administration to take that decision, but there is no need for any delay in house building getting going. That is the key point.

Absolutely; that is central to what the Government are doing. The fact that No.10 and the Prime Minister himself were so centrally involved in convening the taskforce—holding events in No.10, bringing partners in to discuss it—shows the importance the Government place on this. We were always aware that “Protecting What Matters” was a starting point, not the end. As constituency MPs, as well as Ministers and Select Committee members, we will all recognise the challenges that we face in social cohesion in this country. They are driven by many factors, economic inequalities being one and rapid demographic change being another. Social media and algorithms are also driving misinformation and disinformation, which is affecting the situation. “Protecting What Matters” seeks to start working towards addressing some of those issues. We just talked about Pride in Place, which is bringing £5.8 billion into communities. It also has a strong social cohesion element to it, which was reflected in some of the decision-making allocations, particularly the 40 most recent areas that got funding. The insight is that whatever backgrounds people in a community may come from—and they will differ—everybody in that community has a shared interest in making that community as prosperous and successful as possible. We have tried to design Pride in Place so that it acts as a bridge, bringing the community together, when we have other forces in society that are trying to create barriers and drive communities apart. You can see the effects of our social cohesion thinking in individual policy programmes like that. We have specific initiatives like the anti-Muslim hostility definition to help us to understand the nature of anti-Muslim hostility in order to tackle it. We had that horrific incident as well last weekend at a large Muslim community event, where people were sent home early because of credible, live terrorist threats. That shows you the strength of what we are tackling. The Home Office and MHCLG have allocated additional funding to keep places of worship safer, whether that is mosques, synagogues or other places of worship. We have strengthened the powers of the Charity Commission to intervene in organisations masquerading as charities, but which really are sowing division in our communities. There is work to safeguard students on campus while also protecting freedom of speech, which is very important. Nobody on campus should be targeted because of their religion or ethnicity in the way that we have seen increasingly in recent years. We have been looking at algorithms as well, and at how we can give people more control over what content algorithms direct at them. Many people will recognise the experience of clicking on something and it very quickly taking you to something that is hugely disturbing and troubling; for very vulnerable and susceptible people, it can radicalise them. We need to be looking at the work on how we give people more control over algorithms; of course, the Online Safety Act goes some way towards that, but we recognise that there is further we need to go.

You will recognise—as I do, having been a local government leader myself—that councils went through over 15 years of underfunding. Not only that, but funding was never adjusted to meet the changing nature of our population. Populations move around. Poverty does not just remain in one place constantly; areas change, and poverty moves around. If you don’t shift the funding formula to recognise that, you get a system that is more and more out of kilter with the needs that we have in particular localities. One of the big things that fair funding did was realign funding with deprivation, which pretty much maps on to need. Before fair funding, only three out of 10 areas got funding linked to deprivation and need; by the conclusion of fair funding, it was over nine out of 10. That is a dramatic change to happen in one go. It should have happened incrementally over 15 years, but because it didn’t, we had to make the changes all at once, and that is why you saw such dramatic shifts all at once. Some £78 billion goes into local government funding now—that is a 6.1% uplift on the figure before and is higher than inflation. The LGA thinks that there is some quantum more that should go into local government—there is a conversation to be had with the Treasury about those allocations, and I am sure that opportunities will arrive as the economy continues to grow. But, again, the funding was not there to do that all overnight, so we have had to go through a methodology. I put in place an extension of the recovery grant so that areas that had been hit the hardest by austerity but would not have got a fair settlement out of the fair funding formula were further protected. Where, for instance, there had been population change or reduction, the recovery grant protected those areas so they got a fair settlement as part of that. The final point I would make is that this was the first three-year settlement in a decade, and that allows councils to plan with much more confidence as they transition services to meet the needs of their populations.

I recognise the problem. I do not think it is “warm words” to adjust funding allocations in line with deprivation. That was the biggest change in 15 years; going from three out of 10 getting funding linked to deprivation to close on 10 out of 10 is a radical shift, and it moved money to areas that needed it. Notwithstanding that, of course I recognise the pressures that remain on local government funding. In some areas, there is further transformation work to be done, and work is under way through DFE on supporting children’s social care. I made an announcement with the Secretary of State for Education about our willingness to cap excess profiteering by providers of children’s accommodation. When the average operating profits that those companies derive from children who are being looked after in those circumstances is £40,000 per child, that sounds pretty high to me. When you have children in some authorities costing £1 million a year, that looks pretty high to me. There are interventions we can make that would cap parts of the demand-led budget, which are ratcheting way out of control, and help councils control those costs. There is a bigger question, which is not for my Department, about the quantum of funding available for local services and local government. I think some of the changes I described earlier, in terms of place-based working, drive better value for money in the system. We need to do that to make sure that every penny is working as effectively as possible, but there is a conversation the Committee could have with Treasury Ministers about their view on how the quantum needs to change over the coming years.

It is an accurate way of describing the funding that is available to a local authority. While, as a former council leader, I would have shared some of the thoughts that you just expressed, it is a fair way to look at the funding that is available to a council. Whatever views people may have about council tax, it is part of the mix and has been for a long time. You cannot just discount the funding that is available through council tax and the services that it is funding. You are going to come on to council tax.

The statements the Department puts out has both, separately and aggregate.

That is clearly a glaring anomaly.

Obviously, conversations are going on about council tax policy, how it can be made more progressive and the best way of doing that that is fair to everybody. That conversation is under way, and it would be inappropriate for me to throw in my personal views as if they were those of the Department, because at this stage, they are not. We are both involved in a conversation about where that needs to go. A policy that is under way is the higher-value council tax levy—the so-called mansion tax. We have a consultation that closes, I think, today, in order that that comes into force in April 2028. It affects less than 1% of the highest-value properties, which are particularly concentrated in certain parts of inner London. It will raise around £430 million. That is intended to start to address unfairnesses of the kind you have pointed to, but there is an ongoing conversation.

Again, I have views on that, but it would not be sensible for me to share them here, because they are currently personal views, and I am sitting here as a representative of the Government and the Department.

Well, you would need to speak to the Department that gave it its name, rather than to me. I see the problem. I am very in favour of continuing conversation to find a way of making this property tax-based form of revenue raising more progressive, because it clearly is not fair to people living in lower-value properties of the kind that Jonathan just described.

I have said that, but I have not said what I think should happen instead.

I recognise the validity of what you are saying, but it is not just a matter for the Treasury or MCHLG. This would have to be agreed across Government, including by No. 10. I do not want to set hares running, if you will forgive me, even though I share the concern that this particular tax, as it is currently configured, is not progressive.

I have to say that it is such an exciting development that fiscal devolution now sits within the scope of devolution. You cannot devolve powers without resources. If you do it that way, which is what Eric Pickles did when he had my job, that is just devolving the blame, as I used to describe it. If we really want to tackle the deep regional economic inequalities that are pulling our country apart, we have to devolve power and there has to be fiscal devolution included within that. In her Mais lecture, the Chancellor made it clear that the Treasury would be working towards the devolution of elements of income tax to get away from the fragmented grant-based system controlled by Whitehall at the centre that we currently operate under. Under the previous Government, that system saw areas competing for funding rather than being able to access the funding that they needed to drive economic growth and open up opportunities in their own areas. It is absolutely right that we should be looking at fiscal devolution. Areas that start to grow their economy should see a benefit from that to their locality. You need an equalisation mechanism within it as well to ensure that funding goes to areas that are not able to grow their economy, so that we do not end up like the US where wealthy areas that have a much higher revenue base continue to become more prosperous while other areas continue to sink. Of course there would need to be an equalisation mechanism in that. We will also be looking at business rate devolution and business rate retention on the same basis and with an equalisation mechanism, but we have to pursue fiscal devolution if we are serious about devolution.

It is not just about my Department; this is a whole-Government operation. It is one of the reasons why devolution is right, because Whitehall is too silo-driven. You have whole Departments with Ministers and lots of officials who see the world through the prism of the services they are delivering, but if you are at the receiving end in a community as an individual, and services do not tie up in the right way, those distinctions do not make much sense to you. Devolving more to local areas so that they can tie up services differently and better to suit the needs of their local communities is the right thing to do. It also means that things will come together in a more meaningful way, so you can integrate those services and pool budgets to deliver better outcomes for people than if you just look at what one particular Minister in one Department has control of.

That is completely outside the remit of MHCLG.

It is not particularly helpful to sit here and air regrets. We need to look at what we can do to fix the problem, and what I just described about place-based working will mean that the existing resource can be used to get far better value for money and better outcomes for people, including in social care. The discussion we just had about fiscal devolution will mean that we can get more money to the places that need it and get economic growth in those areas that will benefit not just their region but the whole country. There is a huge change that we need to make here to the way that Government works, which will be much more meaningful to people in the future than any regrets I might have about the past.

We have been working with the sector and we published proposals in our local outcomes framework in February. In a recent speech, I said that we will incorporate elements of that into a new neighbourhood guarantee so that quite a jargonistic and technical process can become much more meaningful to residents and they can see what basic core service delivery they can expect on their street, in their neighbourhood, in the town, on the high street or in the district centre where they live. We have that whole new process now, which includes looking at duties and requirements on local government. I do not often praise the previous Conservative Government, but one of the things they did that was beneficial in 2010 was de-ringfence a lot of grants coming into local government. What I think were 150 different ringfenced grants were de-ringfenced. Tragically, by the end of their period in office, we had more than the initial 150 ringfenced grants, so the same process has to happen again. But if you de-ringfence things and give local authorities more discretion about how they can use their funding, they will take decisions more in line with local priorities rather than the priorities imposed—

I haven’t got it in my head. Unless Will has it, we will just have to write to you.

The administration in Woking that was responsible for that was absolutely catastrophic. Because of the scale and severity of that, the Government had to step in; there was no option other than to do that. What underlies all our local government funding reforms and all of local government reorganisation is this: to establish a much more secure and stable foundation for local government, so that more secure and sustainable local public services can be built on that. The changes to funding, and linking it back to deprivation, are intended to achieve that. The interventions in cases where there is excessive profiteering going on are intended to achieve that. Local government reorganisation is intended to eliminate duplication in those areas where there are two tiers of local government, so that the savings can be ploughed back into frontline services, but also so that those areas can be prepared for eventual mayoral devolution, which is the means by which regions will get more control over their own destiny and we will start to address the economic inequalities that mean that people have different life chances in different parts of the country, in a way that is clearly unacceptable. That is the approach that we are taking. The debt in local government, like the national debt, is something that this Government need to work towards managing. The fiscal rules are in place to enable us to do that, and the reforms in local government are intended to make sure that we have a financially sustainable sector for the future.

We have the four devolution priority areas coming forward—Cumbria, Cheshire and Warrington, Sussex and Brighton, and Hampshire. Coming behind them are Norfolk and Suffolk, and Greater Essex. That will continue, and we expect all those areas to eventually become mayoral strategic authorities.

We do need to look at how we both deepen devolution in the areas that have it and extend it to areas that do not have it.

Some of this will be for the incoming Government, but this is clearly a rolling programme of devolution, and we are making huge headway with it. At the LGA conference last week, there was some pushback on the pace at which this Government are going through local government reorganisation and devolution, but we cannot slow it down. If we want to tackle what I and, I suspect, you think is the root cause of the problems we face in this country, which is regional and economic inequality, we have to get power out of the centre, because power being controlled only by the centre is what has led to this problem. The fact that we have seven of the poorest regions in northern Europe in this country, which is the second richest country in Europe, tells you everything you need to know about what has gone wrong. That is what we are trying to correct.

This is a rolling programme, and we should anticipate that it will continue to roll.

I do think that we need a rolling programme of devolution that will eventually cover everywhere. That is right.

Ultimately, the reason for doing this is that it drives economic growth in areas that have been held back artificially, in my case. That will generate more revenue for the Treasury over time. There is an investment up front, but there is a huge benefit further down the line.

Some of that is a question for Departments other than mine, but I think that I have made my position very clear.

We are always looking at how we can do things within the resources available. As well as mayoral strategic authorities, we have foundation strategic authorities, which are going at a slightly different pace. But the approach we have taken is to be very pragmatic and work with areas that are ready and equipped to take on more powers. That is how the right to request is working, with the assumption that Whitehall will say yes to requests unless there is a very compelling reason not to. That principle is not constrained to areas already designated as priority areas; ultimately, it needs to apply everywhere.

It may do.

We have made arrangements so that, on the day of the statement to Parliament—which the Speaker quite rightly demands Parliament to hear first—briefings and information will be available to MPs and council leaders.

No, we will be communicating with them directly.

Written communication to council leaders. There will also be opportunities for briefings and similar for MPs.