Local Government Funding: Rural Areas

Baroness Hayman of Ullock Excerpts

Monday 11th January 2016 Commons Chamber

[Sue Hayman (Workington) (Lab)]

I thank the hon. Member for Beverley and Holderness (Graham Stuart) for securing this debate. I was absolutely delighted when he asked me to co-sponsor it, because this matter is so important for many, many rural communities, including my own in Cumbria.

This debate is about fairness. It is about local authorities in rural areas receiving fair funding. Wherever we live, we pay a fair amount of council tax, from which we as a resident or a business in that community expect to receive decent, accessible services. Currently, rural communities tend to pay higher council tax bills, receive fewer Government grants and have access to fewer services than communities in urban areas. One thing I have always thought is that those of us who have been brought up in rural communities have lower expectations about what services we are entitled to, and we should not have; we should demand what we pay for.

Cumbria, where I live, is a truly rural area. Aside from the small cathedral city of Carlisle, it is the market towns that grow our economy. Some 95% of our businesses are small and medium-sized enterprises, most of which employ fewer than 20 people. Other rural economies are hinterlands to city regions and they have very different expectations, problems and challenges to the ones that we face in Cumbria.

Cumbria has one of the largest land mass areas in the country. To illustrate my point, I ask Members here to imagine a map of London and its surrounding areas. If we laid Cumbria over that map, it would cover an area from Cambridge in the north, all the way down to Hampshire in the south, across to Oxfordshire in the west and over to Essex in the east. I do not think that many people really appreciate the size of the county. Given that alongside that we have a population of only 500,000, delivering services for our local authorities is a real challenge.

The real difficulty for Cumbria is that the business rates retention model is based on growth in business premises. I have already mentioned the number of SMEs and the small number of people they employ, and because of that many of them are based at home; they are residential businesses. Many, for example, are bed and breakfasts. We have only a limited amount of business growth that will be reflected in an increase in business rates income. To put it simply, we cannot increase our income from business rates in the way that can be done in urban areas; we simply do not have the capacity. As I am sure many Members will agree, it is also more problematic for those areas that have two-tier authorities, such as Cumbria.

Let me focus on some of the challenges. First, there is transport, which has already been discussed today. In Cumbria, we have 7,000 miles of roads, and that does not include all the footpaths that the local authority has to maintain. The geography and our weather conditions mean that a huge amount of resources are required to maintain those networks. The large number of visitors we receive also puts a lot of pressure both on the roads and the footpaths. In fact, under the current funding formula, Cumbria does not get any extra money for dealing with its visitors, who increase the population hugely during the summer.

We also need to think about the weather. Everyone has seen the recent flooding in Cumbria. Our roads always suffer very, very badly from the weather, which again puts increased pressure on the council’s funding. We now have huge problems to resolve. I know that we get extra funding from Government for the flooding, but it does not come close to what we need, particularly given the recent council cuts. Our transport budget has been cut by a third, so the roads are already in dire need of extra help.

[Mrs Sheryll Murray]

I have a lot of sympathy with what the hon. Lady is saying, but is she as disappointed as we are on the Conservative Benches that she is the sole voice from her party for this very important debate?

[Sue Hayman]

I thank the hon. Lady for that intervention. I am grateful that I have two of my hon. Friends in front of me, but I take her point. To me, rural issues should not be party political issues. Everyone who lives in a rural community is entitled to be represented by both parties, by the Scottish National party and by other parties that are not represented here today. I have discussed these issues with other Members. I know they are interested and I would have liked to see more of them in the Chamber this evening. I cannot deny that.

On another transport-related issue, let us look at the impact that lack of funding has had on our bus services. Owing to the reduction in funding for Cumbria county council, we have unfortunately lost a number of bus services as the county could no longer afford to pay the subsidies. In a rural area that is a real worry. In Cumbria, anyone who cannot afford to buy and run a car, or who cannot drive, is cut off from accessing services or even from being able to get a job and go to work. In the village where I live, we have a bus to Cockermouth on a Wednesday, which is fine for people who want to do a bit of shopping or meet some friends, but is not much good for anyone who needs to get to work. That service is now under threat. We could lose that important lifeline for the elderly people who live in my village.

My daughter was unable to get a job until she passed her driving test. It is not cheap for a young person to pass a driving test and it is not easy to do so—it took her three goes, but she passed and she now has some work. That situation puts extra pressures on our young people and does not encourage them to stay and live in our communities.

These huge costs of transport make it difficult for the local authority to deliver services across the board. Those transport costs are a factor in the delivery, for example, of social care, as has been discussed. Another example is waste collection. Studies have shown that it costs almost double the amount to collect a bin in a rural area, compared with an urban area. It is not just a little bit more expensive; it is much more expensive.

The public health funding model does not take into account the significant cost of running services in rural areas—again, because of the transport costs and the distances that need to be covered—so we risk letting down the people who live furthest from the centre. The people on the edges are often missed because of the difficulty in delivering those services. That is exacerbated by the fact that our population is ageing. If our population is ageing, does not want to drive and is experiencing more health problems, it seems crazy to me that we do not have sufficient funding to allow older people proper access to the health services that they need.

We have had a campaign running in Cumbria for some time to ensure that services from West Cumberland hospital are not moved to Carlisle and beyond that to Newcastle. It is still a long way for people in my constituency to go to Whitehaven to access services there. If we lose that, it becomes more problematic. Recent events in Cumbria and the number of road closures and bridges damaged show the paucity of our roads infrastructure and the further problems that that causes. We need proper funding so that the county council-maintained roads can be properly managed; otherwise, there is the risk of dreadful isolation in communities in rural areas.

Hon. Members have spoken about rural poverty. Pockets of rural poverty are very real, but often missed. If we do not have proper outreach services, we do not know what people need. As I said, people in rural areas tend to be quieter about their requirements. We could go down a dangerous route if we are not careful. We need to make sure that everyone has the services they need and that they can access employment properly. Unless we do that, we simply pile on the deprivation and do nothing to support those who need help most.

I shall move on to another issue, which I wish I did not have to do. The Government have suggested on a number of occasions that local authorities can make cost savings by prioritising internet-based services and advice. I do not know what it is like for other hon. Members, but I do not want to get bogged down in the lack of access to broadband in my constituency. It makes me want to tear my hair out.

[Dr Poulter]

The hon. Lady makes an important point. Broadband access, as we know, is not as easily available in rural areas as it is in urban areas. Also, given the demographic issues that have been discussed during the debate, we know that there is a challenge with the very elderly, despite the best efforts of local charities and outreach groups in many of our constituencies to get them to engage with digital technology. That is not to say that all older people do not engage, because some do, but with the very elderly there is a particular challenge, and those people can be the among the most vulnerable in our communities.

[Sue Hayman]

I thank the hon. Gentleman for that important point.

One of the problems with broadband is that too many assumptions are made about what we can achieve in rural areas. What I find most frustrating is that as the superfast broadband connection is rolled out in some areas, where we are not getting superfast we are getting super-super-slow as the speed goes down and down. By making it better for some people, we are creating a huge problem for others. I urge the Government not to tell hon. Members and their constituents that they should be accessing internet-based services, when it is incredibly difficult and frustrating to do so. We should either fund broadband properly or accept that we need to look at different solutions.

[Graham Stuart]

The hon. Lady may be a sole voice, but she is making a powerful and important speech, particularly given that it is from the Opposition Benches and grounded as it is in her constituency experience. Does she agree that the inability of rural councils to deliver services more cheaply and more conveniently digitally because the infrastructure is not there, as she has just described, is another reason why a further increase in the gap between urban and rural is untenable?

[Sue Hayman]

Absolutely. Our difficulty in accessing decent broadband acts as another block on enabling rural businesses to develop and grow. That reduces access to increased business rates, as we have heard.

[Drew Hendry]

The hon. Lady is indeed making some fine points and I agree with many of them. Does she agree, though, that the issue is not just rural broadband and accessing those services? She made the point about rural businesses. In many rural areas, they cannot even get a mobile phone signal. That further hampers rural communities’ ability to do business and look after themselves.

[Sue Hayman]

That is correct. I do not get a mobile signal at home, so I understand that point. Another point that has been made to me by a number of rural businesses recently is the inability of people who have gone to markets to sell, for example, to use the hand-held card things because they do not have the signal to be able to operate them. I do not know the technical term, but that causes them problems when they try to sell.

In conclusion, I would like to ask the Government to look again, as other hon. Members have requested, at the way the funding is allocated. Robust rural proofing must be applied to all funding formula decisions right across Government to ensure that we have equality of treatment and sustainability of services.

[Andrew Bridgen (North West Leicestershire) (Con)]

The hon. Lady is making a passionate speech. Does she agree that it cannot be right that our elderly, vulnerable rural residents, who have paid their taxes like everyone else all their life, may be faced at the end of their life with moving to an urban area so that they can access the normal services that they should expect in rural areas?

[Sue Hayman]

I thank the hon. Gentleman for that intervention. It comes back to the lack of bus services, for example. A number of elderly people in my village use the bus on a Wednesday because it facilitates a social life; they can go into town and meet their friends. If that bus service goes, where will that leave them? About a year ago one elderly resident fell and broke her shoulder. All she wanted was to get well enough to be able to get back on the bus and go into town. Had she not had that incentive, I worry that she might not have recovered so quickly. These services provide so much more than is indicated by their face value.

In a nutshell, I would like the Government to think about the bigger picture and consider how important access to transport services, and indeed to all services, is for rural communities. Without proper funding for local authorities, those services will deteriorate. We do not want anyone in our communities to be disadvantaged, so I urge the Minister and the Government to reconsider.

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[Simon Hoare]

I find myself pained, because I disagree not only with the settlement, but with my hon. Friend. Although he is absolutely right to say that this should not become a new cash cow for local authorities, surely to goodness most planning applications are either for very large-scale schemes—I speak with some authority, having been involved in that area for a number of years, and am pretty certain that such schemes could absorb a proportionate increase—or for domestic planning applications that will add value to the property. If someone is having an extension built, they will pay a fee of £120 and then possibly add £10,000, £20,000 or £30,000 to the value of the property, so there could be a small increase to the fee. If we believe in the narrative of localism, that would help local councils to set their own agenda.

I have been asked whether the settlement and subsequent measures take into account both the increase in the national minimum wage and the living wage, both of which are welcome. Frankly, I do not know the answer to that, so I ask it as an open-ended question. At a time of significant reduction, when costs are going to go up, that will be a difficult situation. I have already said that the costs of delivering services in a rural area are, by definition and de facto, more expensive than they are in urban areas. The impact on adult social care, particularly in a constituency such as North Dorset, which is predominantly, though not exclusively, peopled by the retired, would, I fear, be lamentable. I fear for the future safety and security of many of my residents, many of whom will live in what Douglas Hurd used to describe as slight decayed gentility, afraid to ask for help but certainly needing it. I fear that all of us are likely to face a tsunami of headlines, both local and national, concerning elderly vulnerable people who have been caught in this unappetising pincer movement of a reduction in income and being left in their own homes and to their own devices.

[Sue Hayman]

Will the hon. Gentleman give way?

[Simon Hoare]

In a moment. The Government have been absolutely right to pursue a policy that says that adult social care, particularly of the elderly, is best delivered in the home, not a home, but the reduction in the moneys available to county councils to deliver adult social care turns that welcome policy firmly on its head and renders it undeliverable.

In summary, this is a very poor and disappointing deal for my county of Dorset. My residents and councillors, and the officers who work flat out in my county and district councils, are only asking for equity and fairness. The current proposal delivers neither. It would reduce local government to being neither sustainable nor deliverable. In its current form, I cannot support it.

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[James Heappey (Wells) (Con)]

I would like to start by introducing a bit of balance, to make the Minister aware that we are not all entirely against him, and welcome the commitment the Government have made to equalise spending on schools. My hon. Friend the Member for Beverley and Holderness (Graham Stuart) secured an excellent debate in Westminster Hall at the end of last year in which we were able to advance our views. We had some very encouraging responses from the Minister’s colleague, the Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah).

We very much welcome the investment the Government are making to tackle poor broadband connections in rural areas, their commitment to encourage the mobile phone industry to tackle “not spots”, their welcome commitment—this is particularly important in Somerset —to improve flood defences in our county, and some very important improvements to our road and rail network, so it is not all bad. While imperfect, these Government funding commitments are very welcome and will be an important development to our local economies. It would just be great if they could be accelerated.

That said, Somerset is among the worst-funded local authorities in the country. Currently, those in Hackney receive well over three times the amount per head than residents in Somerset. I do not doubt there are plenty of challenges in Hackney, but it is important that the House recognises that there are plenty of challenges in rural areas too, many of which have been articulated well this evening. I will come on to talk about some of those challenges in my area, but it is important to realise the real deprivation in rural areas too. Some of the most deprived wards in the south-west of England are in my constituency, yet they are in towns and villages that, if I were to list them, would make people picture something very different from the reality of some of the lives of their residents. There is digital exclusion, too, and an isolation that is not felt in urban areas. Lower average earnings, a deteriorating demographic, and poor road, rail and bus connections add to the deprivation I have just mentioned.

Given the challenges we face in Somerset—and in Dorset, Devon, Cornwall and all the other places represented here this evening—one would imagine that the funding formula would be set to close the gap. Sadly, that is not the case. Urban areas will lose about 21% of their funding in the next five years, but in Somerset we will lose 26%. There will be Members in the Chamber whose counties will be losing even more than that. As a proportion, the gap is widening not closing.

It is important to place it on record that our local authorities in Somerset are guilty of good behaviour. They have already been riding to the instructions the Government have set. Sedgemoor District Council recently announced a co-operative working arrangement with South Somerset District Council, which crosses the partisan divide. There is a sharing of chief executive and there are greater synergies in the back office. Mendip District Council has a fantastic hub in its council offices, which brings together police and other local services so they can all take advantage of that council building and achieve a saving. Indeed, it has been outsourcing many of its functions to achieve greater cost-effectiveness.

Somerset County Council, too, is guilty of good behaviour, having worked incredibly hard to tackle the enormous debt left by the previous Liberal Democrat administration—no matter how much the latter try to forget it when criticising the council. It is heavily involved in joint working with Devon, North Somerset, and Bath and North East Somerset, and is considering the smarter use of buildings. Particularly successful is how it is trying to use libraries: Glastonbury library will soon be overhauled and be a place not only for books and the internet but to see the police, the citizens advice bureau and local council and public health representatives —all sorts of things delivered under one roof, achieving a welcome saving for local government.

This evening, we have heard many examples of the challenges of rural life and the expense, both public and private, to our constituents. On a particularly pressing issue, Glastonbury, which Members might consider to be a significant place, has recently discovered that all three of its remaining banks are to close within 12 weeks of each other. It is an extraordinary thing to happen in a place as important and internationally famous as Glastonbury, yet it is going to happen. All those who walk to the bank in Glastonbury, many of whom are elderly or less mobile, will now have to get the bus to Street or elsewhere. The banks will say, “You can do all this online”, but these are the people, even if they have the connectivity, who are least comfortable online. They will travel on the bus, requiring a public service they would not have needed if at least one of the banks had stayed.

We in rural areas pay the same for our mobile phones and internet connections as those who live in urban areas, yet we get so much less, and we travel further for our healthcare. Some appointments are inaccessible for those who rely on public transport. There are parts of my constituency from which one cannot reach Taunton, Yeovil, Bath or Bristol for an out-patient appointment, or from which it is extraordinarily difficult to reach a GP surgery or health clinic. I have met constituents who allowed minor conditions to fester because they put off making the journey until it became sufficiently urgent that they needed an ambulance to hospital. That cannot be right.

I have met young people in my constituency who allow the cost of public transport, or their inability to access a council-funded bus pass, to influence their decisions about the qualifications and education they seek post-16. It is ridiculous that they should limit their life chances because they cannot afford a bus pass to get to college to complete their A-levels, apprenticeship or something else.

My hon. Friend the Member for South East Cornwall (Mrs Murray) spoke eloquently about carparks. Free parking is very important to the rejuvenation of our high streets, yet local authorities are over a barrel because parking has become an essential part of their revenue generation, meaning they cannot free up free parking because they would risk no longer being able to balance their books. That is a real challenge.

Adult social care, which we have spoken about already, is a huge and growing expense. The south-west, and Somerset in particular, is a popular place for retirement. I welcome that and think we should celebrate it—it is because it is simply the most beautiful region in the UK—but that growth in the retired population comes at an extraordinary cost. I met a carer before Christmas who told me that her clients for a day were spread over 300 square miles. That means that that carer can see fewer people than her counterpart in an urban area, which means that the cost of adult social care is so much greater in our part of the world.

[Sue Hayman]

Very briefly on vulnerable older people, I was shocked to discover that nearly 300 elderly people died in Cumbria last winter because they did not have proper heating or were not able to look after themselves properly. If the cuts to rural authorities continue, I am concerned that carers will not spot these vulnerable people as they have in the past and the problem will be exacerbated. Does the hon. Gentleman agree?

[James Heappey]

I very much agree with the hon. Lady. I, too, have been struck by what I have heard when I have met social care providers in my constituency. While I trust absolutely that they would deliver first-rate care on their visits, they have been imploring me to get permission for them to visit people just once a day for 30 minutes, rather than twice for 15 or 20 minutes. That might make sense, in that ultimately the person will be getting one, better quality visit, but it would reduce the contact that these vulnerable people have with the outside world and extend the length of time they go without seeing anybody who is supposed to be keeping an eye on them. That is a challenge we face, and we may have to go for what the care providers are suggesting, but it would come at considerable risk.

That is an example of just how expensive it is to do these things in our parts of the world, and the Government need to recognise that in the way they fund local authorities. We understand well—certainly those of us on the Conservative Benches—the Government’s need to balance the nation’s finances. I have been struck by the sentiment expressed this evening, which is very much not that we expect more from the Government but that we expect fairer spending in what they have already committed to spend. I implore the Government please to implement the rural services delivery grant not in part but in full, and as early as possible; to incentivise our councils by confirming that they can keep all that they raise in rates; and to commit to ending the inequality between urban and rural funding, albeit not by asking rural residents to bridge the gap by paying higher taxes, when, as I have said, they are already enduring a higher cost of living, and on lower wages too.

Above all else, let us certainly commit to ensuring that the gap will not widen on this Government’s watch. Sparsity ensures that the cost of doing things in places such as my constituency is more expensive than doing them elsewhere. As I have said, carers spend longer in their cars. School buses are required to carry more pupils over longer distances, which requires more fuel, and the same goes for rubbish and recycling trucks. Less can be done online because there simply is not the connectivity. We pay more in tax and receive less in Government spending, and all to achieve the minimum in local authority service provision. We are asking Somerset County Council to achieve something akin to alchemy. While I applaud it for doing a very good job indeed, it is little wonder that things such as bus services, libraries, road improvements and myriad things besides—things that we would think of as essential to providing the grease for rural life—are coming to be seen as discretionary.

In rural areas we face deprivation, isolation, higher taxes and a contraction of the local services that are so valued and needed by our constituents, and we risk making that worse, not better, under this Conservative Government. I urge the Government to find another way. We must spend our money more fairly and bridge the gap between rural and urban.

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[Mr Jones]

It is down to local authorities whether they feel it right to increase council tax. As I said, the increase that has been built into the figures is 1.3%, which is currently the rate of inflation, and that does not factor in, as I said, an increase up to the 2% referendum principles.

Let me deal with the issue that my hon. Friend the Member for Beverley and Holderness raised in relation to full business rate retention. I can assure the House that a number of consultations are still to be undertaken on full business rate retention. No details have been finalised on how that system will work. Obviously we need to ensure that no areas are left behind when we move to the new system, which has been welcomed, as hon. Members have said, and that includes safeguarding a number of rural authorities that are not in as strong a position as many urban authorities when it comes to raising business rates.

We also need to ensure that we incentivise local areas to increase their business rate base and increase growth and the jobs that come with it. We need to look at that in the context of balancing that reward with the risk associated with challenges on revaluations and when business rates are no longer collected. Such instances were mentioned earlier in the debate. I just want to reassure my hon. Friend the Member for Beverley and Holderness that the Government are considering that very carefully for the future.

My right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) made an extremely powerful case for county areas that include both rural and urban areas. The hon. Member for Workington (Sue Hayman) put the case for Cumbria and mentioned the challenges faced by rural authorities, particularly those affected by the recent flooding. The Government obviously have a great deal of sympathy for the people facing those challenges in Cumbria. We have put forward a significant support package of £60 million to help people in places, such as Cumbria, that have been significantly affected by the recent flooding.

My hon. Friend the Member for North Dorset (Simon Hoare) raised a number of issues. He said that he would like to see more opportunities for district councils to implement a £5 increase in their council tax, rather than the 2% referendum principle. He mentioned the challenge around local planning fees, which I am sure is something we will take on board. He also mentioned the importance of adult social care, as did my hon. Friends the Members for Thirsk and Malton (Kevin Hollinrake) and for St Ives (Derek Thomas) and a number of other colleagues. As I said earlier, the Government are putting forward an additional £1.5 billion through the better care fund. I would like to reassure hon. Members that, unlike the current iteration of that fund, the £1.5 billion will all be going to local government.

I completely agree with my hon. Friend the Member for South East Cornwall (Mrs Murray) that car parking should not be used, as she put it, as a cash cow. The figures we have prepared certainly do not take into account any increase in fees and charges that local authorities might wish to make.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) made a number of points, one of which was the need, in his view, for local government reorganisation. The Government are willing to listen to proposals, but I am sure that he will know that they must be local proposals that are brought to the Department.

My hon. Friend the Member for North Devon (Peter Heaton-Jones) made a number of points. He mentioned coastal deprivation, which is an extremely important point. He will be glad to know that the coastal communities fund has been extended for another three years, with £90 million. He invited me to visit Ilfracombe, and I look forward to doing so the next time I am in that neck of the woods. During the summer I spent several periods in Cornwall and Devon on visits. I was extremely impressed by the approach of many areas, particularly how local government was trying to deal with the challenges that are currently faced.

[Sue Hayman]

We have deprived coastal communities in west Cumbria as well. With regard to the retention of full business rates, one of the areas that we get the most funding from is the nuclear industry, from which we retain 50% of business rates, but the proposal for new build is that the Government would take 100% of business rates. Will the Minister confirm that that will be looked at as part of the funding formula?

[Mr Jones]

Obviously we are looking at the whole of the funding that comes from business rates. I hope that the hon. Lady will be supportive of the nuclear industry, because there seems to be some confusion about that. I hope that she will also support Trident, which is also an important part of industry in this country.

My hon. Friend the Member for Isle of Wight (Mr Turner) set out the challenges that the island faces. I thank him for bringing representatives of his council to see me last week.

The hon. Member for Croydon North (Mr Reed) set out a number of challenges that the Government face in this regard, but he did not say anything about the main reason we are in the position of having to make extremely difficult decisions—the deficit that his party left behind when last in government.

We have recognised the challenges faced in rural areas and agree with many of the points made today. We are committed to supporting our rural areas, even at this time when there are some differences in opinion about how that is achieved. We want to give rural areas as much power as possible to grow their local economies and support their communities. This is a time of big opportunity and expectation of reform in local government. I assure hon. Members that we are listening carefully as we prepare the final settlement and consider how the transition towards 100% business rates retention happens. As I say, we are in a period of consultation. We will add the representations made in this debate to that consultation. I encourage right hon. and hon. Members and their councils to make written representations by Friday. We are listening carefully to colleagues. I have listened carefully to what has been said in the House today, and we continue to listen carefully to our colleagues in local government.