Local Government Finance (England)

Andrew Turner Excerpts

Wednesday 10th February 2016 Commons Chamber

[Greg Clark]

My hon. Friend is absolutely right, and we could add to those services school transport, which is particularly costly in rural areas. That is why the underlying formula should catch up with what has happened in many communities. That is overdue.

I will highlight four features of this year’s settlement. First, for decades councils have had to set annual budgets without knowing what resources they can expect 12 months hence. That prevents them from planning long term, and it promotes inefficiency. Because plans and contracts have to be short term, councils miss out on the economies that would be possible if they could take a longer view. For the first time in the history of local government, the settlement gives indicative figures for the next four years to any council that shows that it can translate such certainty into efficiency savings.

[Mr Andrew Turner (Isle of Wight) (Con)]

There is a deep hole in the arrangements for the island. Can the Secretary of State work with locals, of all parties and of none, to find solutions to the problems that we face?

[Greg Clark]

Indeed, and I pay tribute to my hon. Friend for the work that he does as MP for the Isle of Wight in bringing together all its leaders and councillors, regardless of party political affiliation, to promote its best interests. I look forward to visiting the island in his company to meet the councillors and officers.

--- Later in debate ---

[Mr Andrew Turner (Isle of Wight) (Con)]

It costs more to deliver public services on an island with no link to the mainland. For instance, in the event of a major emergency, we cannot get help from the mainland fire services in less than an hour, so capability must be maintained to a higher level, to secure the safety of islanders and their visitors. That is just one example of the extra costs. There are many others, which have never been properly recognised in successive local government funding formulae.

Back in 2002, the Isle of Wight was set to lose the additional costs allowance. The island was counted in with much more affluent Hampshire. The then Labour Government decided to change the rules, resulting in the island being too small to qualify for the ACA on its own. The former leader of the Liberal council, Shirley Smart, and I had to explain why the council could not manage without it.

The Elliott review—a major study of local government finance—was published in 1996. Professor Elliott recommended that further research was needed on disparities in non-labour costs for only two councils, namely those of the Isle of Wight and the Isles of Scilly. That research has not been carried out. Nick Raynsford, the then Minister for Local and Regional Government, eventually agreed that we would continue to receive the ACA. The extra cost of delivering services on an island was not specifically recognised, but we none the less continued to receive the £3 million or so a year.

Over the years, the method of funding local government has changed, but the benefits of the island getting the ACA remained somewhat buried in the unfathomable formulae that made up the annual settlements, although I am told that the value decreases over the years. When the move away from the Government grant to local funding was announced, it became clear that this would make the difficulties of the Isle of Wight Council even more difficult and even more severe. Indeed, the council could not find a way to carry on beyond this year. For the first time in many years, the Isle of Wight Council asked me to assist it to achieve a number of specific sensible proposals that would help it to change.

The announcements made on Monday did not help the island quite simply because our issues are unique—something that the Secretary of State and even the Prime Minister have recognised. We do not qualify for transitional help because the settlement based on the existing formulae did not disadvantage us. It was the formula itself that disadvantaged us. We do not qualify for the rural sparsity grant because people cannot live very far from a town on an island only 23 miles by 13 miles.

With the announcement that there was to be a fair funding review, I realised that my Front-Bench team recognised that some problems were unresolved even by the revised settlement. If we can get the real costs of delivering services on an island recognised, we will find a long-term solution to a very long-term problem—but we still have the problem of getting to the review. The future of the Isle of Wight Council beyond this year was not secure. Money is in short supply, but when there is not so much of it to go around, resources must be shared most fully.

I am grateful for the discussions with my right hon. Friend the Secretary of State about this problem, and I thank him for his offer to visit the island to find the necessary flexibilities for the council to find a way through the challenges until a fair funding settlement can be put in place.

I will be honest: I had initially decided to vote against the settlement this afternoon. Based on our discussions, however, I will support the Government this year—I say again, this year. I trust my right hon. Friends to deliver on these proposals over the coming months. I am very proud that this Conservative Government are doing what was not done over the past 10 years. I look forward to working with the Government, and on a cross-party basis on the island, for the benefit of the Isle of Wight and all its islanders.