Local Government Funding: Rural Areas

Debate between Lord Garnier and Victoria Atkins

Monday 11th January 2016 Commons Chamber

[Sir Edward Garnier]

A number of points flow from my hon. Friend’s intervention. First, he confirms why it was sensible of me never to have spoken about local government finance. Secondly, I agree with him that Herefordshire is a beautiful county, and he illustrates that, but many of us who represent shire counties do not just represent rural areas. For example, my constituency is 90% rural geographically, but 50% of my electorate come from a suburb of Leicester—Oadby and Wigston, a borough in need of special attention from the Government. I have discussed that with the Minister and I will bring the matter back before the House before very long.

My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) and my right hon. Friend the Member for Rutland and Melton (Sir Alan Duncan) are in their places tonight. Because we represent that bit of Leicestershire outside the city of Leicester—there are seven Conservative Members of Parliament for the county of Leicestershire and three Labour Members for the city itself—it is assumed that we all represent, and all our constituents live in, wonderful leafy idylls. I refer to the pre-penultimate paragraph of the speech made by my hon. Friend the Member for Beverley and Holderness there. There are, however, people living in my constituency, for example, in South Wigston, Market Harborough, Fleckney and Kibworth, who are not at all well off. Market Harborough is a market town, as its name suggests, but Kibworth and Fleckney are large villages. As my right hon. Friend the Member for Rutland and Melton would agree, there are people living on farms and in little hamlets who are not at all well off. The fact that we represent so-called “shire counties” does not mean to say that everyone there drives around in a Range Rover and is looking forward to the next cheque from the common agricultural policy—life is not like that.

As has been mentioned, school funding in our area is second bottom of the Whitehall funding list, although it costs just as much to educate a child in rural or semi-rural Leicestershire as it does in the city of Leicester. Indeed, many schools in the borough of Oadby and Wigston, which abuts for three or four miles the city of Leicester, are educating city children, who come across the boundary into the county of Leicestershire because, by and large, the schools in my constituency, and no doubt in the equivalent parts of the county around the border of the city of Leicester, are, on average, better than those in the city. Yet we have to pay for the education of those children from the city of Leicester with the much-reduced county funding. That is just an illustration of the problem we face year on year.

[Victoria Atkins (Louth and Horncastle) (Con)]

In a rural area such as mine, where my local district of East Lindsey covers 700 square miles, most of which forms my constituency, there is an added problem with transport. It costs Lincolnshire County Council millions of pounds to transport children across the county to their nearest school, a cost that, happily, most city centre children do not have to bear.

[Sir Edward Garnier]

I agree on that, and my hon. Friend illustrates the sparsity factor. I am getting into the jargon now—you might almost think I am beginning to enjoy myself, Madam Deputy Speaker, but I do not want you to get that impression. On the sparsity factor, getting schoolchildren from parts of rural Lincolnshire or rural Leicestershire to the town centres where the schools are is an expensive activity and the county councils are finding it increasingly difficult to subsidise it, to the concern of the parents of those children.

I do not wish to think of this as being as complicated or difficult as the Schleswig-Holstein question, but I sometimes think that either I am either dead or mad, or I have forgotten the answer. Lord Palmerston, one of our greatest Prime Ministers, said that only three people knew the answer to the Schleswig-Holstein problem—one was dead, one was mad and one had forgotten the answer. That is a diversion, I hope.

I am relying heavily here on a note provided by the excellent Conservative leader of Leicestershire County Council. The council recognises that the Government wish to use “spending power” as the only means of discussing the funding available to local authorities and that there are financial constraints—there is a limit on the amount of public money available. In government jargon, “spending power” means Government-funded spending power—I know this gets very exciting, Madam Deputy Speaker—which means core spending power minus council tax. It consists of the settlement funding assessment, the new homes bonus and the rural services delivery grant, and from 2017-18 it will also include the improved better care fund—would that Lord Palmerston were with us now!

The Government’s proposed changes to the revenue support grant, designed to limit reductions in funding for the local authorities most dependent on RSG, such as inner-London boroughs and cities, will have a significant impact on Leicestershire and other similar counties. They will mean a £6 million additional loss of RSG, making a total reduction for the county council of £19 million in RSG for 2016-17. The additional loss to all counties amounts to £160 million. The Government’s proposals also will mean that £2 million of retained business rates will be lost to Leicestershire in 2019-20 as those are redistributed—guess where, oh Conservative Government—to cities and inner-London boroughs. I am not making this up. These changes can fairly be seen as the latest in a series of “compromises”—I say that politely—made by successive Governments.

Let me quickly illustrate how the system is not working now. The RSG does not take account of the needs of the local population. RSG per head in 2016-17 in Leicestershire, which includes the seven or eight district councils or borough councils outside the city of Leicestershire, is £67, whereas the figure for Islington is £246 and the figure for the city of Westminster is £251. Council tax per head at band D in 2015-16 for Leicestershire, including the districts, was £490, whereas the figure for Islington was £416, with the city of Westminster figure at £352. One sees straightaway from those examples the imbalance that the campaign led by my hon. Friend the Member for Beverley and Holderness has been so successfully highlighting.

Spending power—I referred to that complicated compendium a moment ago—is apparently how the Government define income to a local authority. The Government headlines around the provisional settlement and the so-called “good news” are directed towards the position right at the end of this Parliament, in 2019-20, and not to the current year. My colleagues in the county council welcome the principle of a four-year settlement, but not if its certainty increases the savings required and compels further service reductions in the short term, and does not take account of spending pressures at the end of the four years, when a projected 3.5% increase in spending power for Leicestershire will be totally inadequate. That sort of increase would simply not meet the needs of the over-65s, an increasing school-age population and the cost of the living wage. For example, the cash increase in spending power for Leicestershire County Council by 2019-20 equates to £12 million, but that is the context of living wage costs to the council by 2019-20 of £20 million. The 2% adult social care precept equates to £22 million, which compares with the increase in adult social care costs, including the living wage, of £50 million over the same period.