Rural Councils: Funding

Debate between Alicia Kearns and Pauline Latham

Wednesday 29th November 2023 Westminster Hall

[Alicia Kearns (Rutland and Melton) (Con)]

I am pleased to speak under your chairmanship, Mrs Latham. I thank my hon. Friend the Member for West Dorset (Chris Loder) for securing the debate.

When my hon. Friend the Minister accepted his position, he might not have realised that he was essentially agreeing to be hunted down by the Member for Rutland and Melton on a weekly basis. On that, I urge him to open his diary—after my speech, of course—and put in a slot for us to have a private discussion about this matter. I thank him for getting his pen out so quickly. Having set out the ground rules of our relationship, I will not repeat many of the arguments made by my hon. Friend the Member for West Dorset. As we all know, the reality is that it costs a lot more to deliver services in rural areas, and if we are truly to level up the whole country, we need to deal with the funding imbalance.

Rutland County Council and Leicestershire County Council are both severely underfunded. For example, if Leicestershire, which my hon. Friend the Member for West Dorset kindly mentioned, was funded at the same level as Surrey County Council, we would receive an additional £104 million to help the people of Leicestershire. On a similar basis, neighbouring Lincolnshire County Council, which includes Stamford, would receive another £116 million to support its people.

According to Leicestershire County Council, its budget gap is set to grow by £13 million next year and, realistically, could exceed £100 million by 2027-28. Beyond council tax, the east Midlands receives the lowest levels of public investment of any UK region—something that we have to end. I am seeing the repercussions of that low public investment in my constituency. Leicestershire County Council has decided to pull out of the next stage of a bypass. In effect, we will have half a bypass. If the county council had built the north and the south routes when I had secured the money from Government to build the entire bypass, we would not be in this position now. However, due to the fiscal situation that it finds itself in, we will now have just half.

Rutland County Council has been an effective unitary authority for many years and we are very proud of our independence. Indeed, the Minister’s predecessor visited our county regarding this exact topic on my invitation—another invitation will follow—and he found us to be one of the most fiscally responsible and effective councils when we were under Conservative leadership.

However, we are required to raise a shocking 80% of our revenue through taxation, when the national average is just over 60%. That means that for a band D council tax property in Rutland—hold on to your hats, ladies and gentlemen—the owner pays £2,365. That is the highest in the country, despite the fact that we are in the bottom 10% in the country for social mobility. What does that mean? We receive £331 less per household in Government funding than other councils, we have the highest council tax in the country, and we have some of the worst social mobility.

However, the Minister will be pleased to learn that I have not just come here to tell him that he must fix the problem; I have come with a solution. At the start of the year, I considered how we could bring fairness back to funding. I do not believe that the fair funding review is necessarily feasible, unfortunately, due to the £4 billion cost that it would probably incur, so I considered the most noble of Conservative aims: how do we improve social mobility?

On that basis, I looked, for example, at affluent counties such as ours—Dorset, Rutland and Leicestershire —that look like they do not have deprivation, but actually the pockets of rural poverty within them are something that no MP would ever forget if they saw them, because they are so heartbreaking. We know that it costs far more to deliver services in our areas, but council funding formulas are blind to social mobility, with the Treasury settlement funding assessment targeting only areas with high deprivation.

Adjusting for deprivation, the most socially mobile areas end up with funding allocations that are over 50% higher than the least socially mobile areas. Essentially, if someone is from one of the least socially mobile areas, they receive less funding. Indeed, I have worked out, by going through the figures, that there is actually a penalty, which means that someone’s chances of building themselves up and going where they want are low. I went to Onward and said, “Will you help me work this up into a proposal, to see whether I am mad?” The proposal is not a request for more money; I am asking for us to put social mobility alongside deprivation in funding formulas.

When we do that, we do not see many people lose out. Indeed, the Minister would benefit; his Parliamentary Private Secretary, my hon. Friend the Member for Blyth Valley (Ian Levy), would benefit; the Chair would benefit; and both speakers for the opposition parties who are here today—the hon. Members for Oldham West and Royton (Jim McMahon) and for Westmorland and Lonsdale (Tim Farron)—would benefit. This is not a party political solution; this is not about red wall or blue wall. It is about bringing fairness back, and it works. I have met the Chancellor and the Minister’s predecessor and they were both very interested in this proposal. We can do this within the existing fiscal headroom.

By introducing metrics for social mobility, we can target funding at both areas of high deprivation and areas of low social mobility in equal measure, ensuring that we address poverty while also boosting opportunity.

In conclusion, the funding formula has not changed for 10 years; we must change it. Will the Minister kindly meet me and consider our report, which I believe would fundamentally change this situation? I will just repeat this for those listening from the Treasury: I am not asking for more money; I am just asking for fairness and I am bringing forward a solution that will help Rutland and Melton and so many other areas around the country.

[Mrs Pauline Latham (in the Chair)]

I now call the spokesman for the official Opposition. Both Front-Benchers have 10 minutes in which to speak. I am very disappointed that the spokesman for the official Opposition was late to this debate. That was a discourtesy to the Member who moved the motion. I hope that he will take that into account for further debates.