Local Government Funding: Rural Areas

Debate between Graham Stuart and Kevin Hollinrake

Monday 11th January 2016 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to follow the beautifully presented case made by my hon. Friend the Member for South East Cornwall (Mrs Murray).

I am a former businessman, and fairness was a guiding principle of my business career. I think it will be the most commonly used word in this evening’s debate. Like many of my colleagues, I stood on a platform of getting a fairer deal for our rural areas. They do not get a fair deal today.

The provisional settlement is the opposite of fair. In effect, there will be a 37% reduction in North Yorkshire County Council’s budget, versus an average reduction for metropolitan areas of 19%. Compared with what would happen under a flat-rate reduction, counties across the UK will be £161 million worse off in cash terms in 2016-17, while metropolitan authorities will be £73 million better off. That is a massive redistribution. In effect, council tax increases in my constituency and others like mine will be supporting London and metropolitan areas.

North Yorkshire County Council is one of the biggest losers, on the back of what is already a bad deal. A band D taxpayer in North Yorkshire pays about £1,430 a year, whereas one in Westminster pays £670 a year. Nationally, as my hon. Friend the Member for Beverley and Holderness (Graham Stuart) pointed out, people in rural areas pay about £81 a year more in council tax, but get about £130 less in their settlement funding allocation. We pay more, we earn less and we get fewer services.

Services are harder to deliver in rural areas. We have many bus passes in Thirsk and Malton, but very few buses because it is so difficult to provide buses on a commercial basis and it is getting more challenging to do so. All we are asking for is a fair deal. We welcomed the increase in the rural services delivery grant to £65 million a year, but that is back-loaded. Effectively, in 2016-17 it will deliver only about £4.5 million. The gap is widening, not narrowing. That is happening on the back of other areas where we do not get a fair deal, be it healthcare or schools, although huge progress has been made in this Parliament to remedy that situation.

[Graham Stuart]

My hon. Friend is right to highlight the Government’s promise to bring in fair school funding. We all welcome that. However, in the last Parliament, when reductions were made in local government funding, they were uniform. If the Government saved 11%, everybody’s grant was cut by 11%. That did not close the gap, but there was the development of the rural services delivery grant. In this Parliament, the proposal is that metropolitan areas will see their local government grant reduced by less than 20%, but in his area it will be reduced by 30%-plus. Does he agree that that is not acceptable, as it will make an already invidious situation even worse?

[Kevin Hollinrake]

I absolutely agree. I hope that this campaign will be as successful as my hon. Friend’s campaign for fair funding for rural schools.

This debate is not about the size of the cake. Local authorities need to share the burden of balancing the books. Governments of both colours have run deficits for 28 of the past 34 years. We are still running a deficit this year of about £75 billion. We need to make cuts. The challenges ahead will be about increasing social security budgets. Sixty years ago, social security accounted for 11% of spending. It now accounts for 28%. Health spending has gone from 7% of spending to 18%. Those issues are particularly profound in rural areas. We know that we need to make cuts. There is no alternative that will balance the books.

This debate is not about the size of the cake, but about how the cake is divided. North Yorkshire expected a flat-rate cut, which would have meant a 27% reduction. That is a challenging reduction. In the words of our chief executive, it would be “tough but understandable”. The proposed 37% reduction, which amounts to £23.7 million, is £6.9 million worse than a flat-rate reduction. The social care precept on the council tax will raise only £4.8 million, so we will be £2 million worse off, and that money is supposed to help our adult social care—another very profound issue in my constituency, which has seen huge increases in the elderly population. There will be a 20% increase in the number of over-65s and a 50% increase in the number of over-95s in the next five years.

We need to make sure that we get a fair deal. Of course, local authorities need to play their part in that. They need to develop greater synergies and more efficiencies. In the local authority area of North Yorkshire County Council, there are nine local authorities. I do not know how sustainable that number is in the longer term. I fully support reorganisation. At a time when we are losing services, local government must be more efficient.

One could say that local authorities should use their reserves, but many of those reserves are committed, particularly to flooding schemes, for which we have seen an increased need in my area over the past few weeks, and to supporting the roll-out of broadband, improving our roads and filling in potholes. There is a feeling among my constituents that we are not getting a fair deal, so I call on Ministers to revise the proposal to ensure that there is fairness for people in both urban and rural areas.