Local Government Finance

Anne Marie Morris Excerpts

Wednesday 12th February 2014 Commons Chamber

[Brandon Lewis]

My hon. Friend, with his experience, makes a clear point, which highlights how some Labour Members sometimes like to forget the starting point from which they are working and what high spending power some of these authorities have.

[Anne Marie Morris (Newton Abbot) (Con)]

I congratulate the Government on changing the Bellwin formula at this point, which is relevant to the local government settlement. The percentage has gone from 85% to 100%, and the limit has now been relaxed from £1.7 million to £1.1 million. That is good, but my local authority tells me that although their pothole gangs have gone from 13 to 35, all planned work, other than drainage work, has had to be put on hold, so there is still a need for more.

[Brandon Lewis]

I thank my hon. Friend for that, and I know she is rightly fighting hard for her area. As the Prime Minister said today, we must make sure that we do all that we can to ensure that areas have everything they need in this situation, and I will discuss flooding in a few moments.

--- Later in debate ---

[Anne Marie Morris (Newton Abbot) (Con)]

Devon, as we have heard today, is in a particularly difficult position, partly as a result of its rurality and size—we have more roads than Denmark, for example, and they take a lot of maintaining—and partly because of the age of our population. Teignbridge district council, my local authority, has the highest number of over-65s in the whole of the south-west. That puts a huge burden on councils, whether district or county.

The spending power of both types of local authority in Devon is determined by four key factors: the level of the revenue support grant; special support, particularly efficiency support for sparse areas; business rates; and council tax. The challenge with the revenue support grant, as we have heard, is that it has been massively squeezed—by some 8.5%. Why are the Government doing that? I entirely understand that they want to incentivise good behaviour, but Devon has been good. It has collected 98% of its council tax and cut its reserves to the bone. The average grant for rural Devon is 50% less than that for its urban counterparts.

What impact will that have on some of the very special services that we all value, such as education? Devon is sixth from the bottom in the education funding table. It gets £480 per pupil less than the average. I do not believe that is acceptable. To say that we can clearly do with less because we get good results is simply not true. It also has an impact on public health. In Devon we receive £29 per person—remember the age of our population—yet the national average is £51 per person.

The Government, and indeed previous Governments, have recognised that unfairness. They said in 2012 that it is not right, but so far nothing has been done. The ESSA—efficiency support for sparse areas—was intended to provide the answer. Although I am grateful that the figure this year will be £11.5 million, rather than the £8.5 million we had last year, because of damping it will give us less than 90p a head. We need three times more than that. How much of that funding will my local district council get? Last year it got £2,275, so I guess that this year it will get less than £2,500. Last year the county council got £741,318, so this year it will get less than £800,000.

The take for business rates assumes that businesses can afford to pay. Many businesses in my constituency are finding business rates one of the most difficult things they have to budget for. I am pleased that the Government have undertaken to cover the lost revenue through the 2% cap, which I welcome, but it is an ongoing challenge. The reality is that business rates, as currently constructed, help neither the taxpayer, nor the local authority. They are in need of substantial reform. Council tax, the other source of revenue, is a concern for those living in rural areas, because they already pay £86 per head more than those in urban areas. Even if there was no freeze, there is only so far the pips can be squeezed. Frankly, I do not believe that we can go any further.

In my view, therefore, the settlement penalises rural communities and does not reward good councils. I urge the Government to look at it very carefully, because this cannot go on. I would certainly like to see some progress made by this time next year.