Isle of Wight Local Government Finance

Bob Seely Excerpts

Thursday 23rd November 2023 Commons Chamber

[Bob Seely (Isle of Wight) (Con)]

It is good to see you in the Chair again, Mr Deputy Speaker. Islanders sometimes ask me what the purpose of these debates is, and the answer is simple: they are occasions for me, as the Member of Parliament for the Isle of Wight, to raise issues of importance for the Island and to do so on the public record—in Hansard—and then to get a considered response from a Minister of the Crown, who in this case is my hon. Friend the Member for North Dorset (Simon Hoare), and I welcome him to his new role. His predecessor, my hon. Friend the Member for North East Derbyshire (Lee Rowley), was good enough to visit the Island and engage in this issue consistently. I know that the Minister has some big decisions to make in a short amount of time, so I will help him make those decisions as much as I can by trying to make as strong a case as I can.

The critical point that I will argue is that the Isle of Wight is the largest island by population in England—an island being separated by sea from the mainland—and the only island authority in the UK that does not receive a permanent uplift to council funding to reflect the additional costs resulting from separation by sea from the mainland. I will make two arguments. The first is on why the Isle of Wight is treated differently from every other island with a sizeable population separated by sea from the mainland. Secondly, I will look at what that uplift in financial terms would be.

A couple of hours ago, I received a letter from the Minister in which he said:

“Island funding is an issue you have raised with the Department numerous times, and I am pleased we have progressed this issue to this stage.”

He is certainly right that I have raised it numerous times. I have raised it on dozens of occasions, with the most significant of those—debates in the House and letters to Prime Ministers—being: 9 May 2018; 25 September 2019; twice in October 2019; twice in October 2020; 15 June 2021; 10 August 2021; 30 November 2021; 28 November 2022; and 26 September 2023. As I said, there were multiple occasions in between.

We do not get an island factor and, as I said, we are the only island that does not. We were recognised to have that analysed in the fair funding formula, and it was the Prime Minister, when he was in my hon. Friend’s role as local government Minister, who committed in the fair funding review to look at the cost of providing services on an island and on the Isle of Wight. Sadly, thanks to covid, that fair funding review was never implemented. I consider that to be an historic injustice. We have in effect gone back to the era of modern government that started in the 1960s.

There is a generalised rule for islands that is not being applied to my constituency of the Isle of Wight. There is no logic or consistency to that position, and I suspect it is one that would be difficult to defend, either morally here or legally in a court of law, because one of the principles of modern governance is consistency and fairness, neither of which seem to apply in this case.

I turn to a series of studies. Since 1989 there have been six major studies into the impact of separation by sea on the funding of public services on the Isle of Wight. The most recent was published by the University of Portsmouth, to which I am grateful for its work—it shows the value of working with academic institutions and doing really good quality, peer-reviewed work. Portsmouth argued that the additional costs of providing government services on the island were up to 25% of net expenditure. It identified three factors that inflated our costs and made it difficult to provide Government services for the same amount of money.

The problem for my hon. Friend the Minister is the methodology. If the inputs are incorrect, the outputs will not be correct either, and if nobody is taking into account the additional costs of providing government services because the methodology does not allow that, we will not get outputs that are fair and consistent either with other authorities of the same size or with islands.

Portsmouth identified three factors: first, the lack of a spillover of public goods between the mainland and the Isle of Wight, which forces us to be self-sufficient, but at a cost; secondly, the Island premium of higher prices charged by suppliers on the Island because there is a smaller market, combined with the ferry costs— I will come to that—and thirdly, the additional costs to the Island that result from physical and perceived dislocation. Personally, I do not understand why anyone would not want to live on the Isle of Wight—considering that there are 8 billion people on the planet, it is probably quite good that most choose not to—but it is sometimes quite difficult for us to find experts, such as senior NHS doctors. Those are the three factors.

I want to make it clear that since I became the Member of Parliament in 2017, working with other people, the NHS and the council, we have got and delivered a better deal for the Island. We have got major investment in the NHS, the railway has undergone significant repair, Isle of Wight College is about to be demolished and rebuilt, and both our levelling-up bids have been accepted. We have also saved shipbuilding in East Cowes and got £20 million from the towns fund for Ryde. We have £175 million in total, which is buying good things like a better health service, better jobs and better life chances for our constituents. I am proud of that record, but that £175 million is a capital sum. The issue is the annual funding settlement to the council. It is an element of getting a better deal. We have a better deal in many areas, but I want a better funding settlement for my council.

Related to all that, the elephant in the room is the ferry crossing, which has one of the highest costs in the world. I will not dwell too long on this, because I want to hear the Minister’s eloquent response, but we have some of the most expensive ferries on earth. We have had lots of good ideas about what to do about them, but we have never had a shared manifesto that the MP and the council can agree on. The Island’s council has no powers over the ferries, despite being the transport authority, and as far as I can see it has never taken a policy position. We have the Transport Infrastructure Board, under the great leadership of Christopher Garnett, but the ferry firms’ participation is voluntary, and I think that is wrong.

I understand that soon the ferries will start to have discussions about grants and Government support to move to net zero. At that point, when public money is being spent, there should be a quid pro quo, such as a public service obligation of some kind. I am also moving towards the idea of a Solent ferry regulator, which would have the legal power to sign off on timetables, debt levels, changes to ownership and other issues related to the ferries. The council should also have a seat on both the Wightlink and Red Funnel boards.

I will leave the ferries element there because I will develop it in the new year, but it is part of the additional costs that the Island faces, adding cost to everything physical that we try to get over, and to people coming over as well. In fact, I think the fair funding formula said that a foot passenger adds about 35 miles, and a vehicle bringing stuff on to the Isle of Wight adds the equivalent of a drive from London to Peterborough—about 70 miles.

Going back to the reports on the Isle of Wight, the most recent one, commissioned last year by one of the Minister’s predecessors, was won by a company called LG Futures, which is a local government think-tank that does good work developing ideas for local government. The Government commissioned the report to review the evidence and work out the additional cost of providing public services on the Island. LG Futures peer-reviewed the evidence and concluded that every relevant study undertaken independently—that is the key word—confirmed the additional costs of providing parity of public services on the Island. The critical point is that the Island cannot simply access the services provided by neighbouring authorities, because we are separated by sea. We have the dislocation and the island factor—eloquently outlined in the University of Portsmouth’s report, and indeed reports going all the way back to the Edwards commission in the 1960s. Therefore, the Island provides fewer services compared with comparative councils, neighbours and unitary authorities. That is why we believe that the current system is unfair.

I will speak for another eight minutes or so, because I want to make sure that the Minister can get a word in edgeways. I persuaded the Government to reopen the examination of Island funding earlier this year, and I thank the Minister’s predecessor for doing so. We have engaged closely with his Department. The work we have done this year is probably the most detailed to date. Throughout the process, the Isle of Wight gathered all the data that we have been able to, and we made estimations where we were not able to get statistical data. One of the issues we have found is that perfect data is not readily available, therefore a level of ministerial judgment is needed. In our evidence, we believe that the total net expenditure and unit costs on the Island are about 14% above the statistical average of our neighbours. When Portsmouth says up to 25% and zero is no change, the estimates we have come up with this summer, working with the Minister’s Department, show an additional cost of 14%.

There has been a series of letters, and I know the Minister wants to have another look at the evidence. He is perhaps writing to us again. I am very grateful for that, because it is another chance for us to make our case. Once we provide that evidence again, I would like to speak to the Minister again, if he has time, just to make sure that he understands the arguments we are presenting. His own Department now says that

“there may be additional costs associated with Island status.”

I am grateful for that acceptance of our case. It is somewhat hedged because we are dealing with public servants and there is a degree of ministerial judgment here, but I disagree with the equivocation. There are clearly associated costs. For me, it is a question of how much. Unless the Minister seriously wants to argue today that we can provide the same level of public services for the same money on an island with a smaller market and hyper-expensive ferries as we can on the mainland, then with great respect to him—I am sure he will not be making that argument—that would simply not be a credible argument.

That brings me back to the core point and the issue of the principle here: why is the Isle of Wight treated differently from other islands that are effectively the same, separated by sea? Once we accept the principle, what is the monetary value put on it? For England’s only other island authority, the Isles of Scilly, the uplift or island factor is 50%. It is different from the Isle of Wight. It is smaller and there is an increased difficulty in providing services—I get that—but that is a 50% uplift. If we look at perhaps more comparative islands, the special islands needs allowance in Scotland provides a 10% uplift in general funding for Orkney, Shetland and the Outer Hebrides. For councils with significant populations, the allowance is allocated between 5%, 20% and 50%. In all cases, a simple fact is recognised: there is an island uplift because it costs more to provide Government services on an island.

I come back to my central point. I sent the Minister my speech early. I have edited and tweaked it a little bit, but he has had a copy of it for a day or so. I would like very much to ask him for the Government to accept in principle that the Isle of Wight should have an island uplift, as all other islands separated by sea from the mainland do, and then to work with me and the council’s experts to find a number. For me, the most important element is the acceptance that the Isle of Wight should be treated equally—I think that is legally and morally justified—as an island as others are. We negotiated last year what the Government described as a temporary uplift. It was about £1 million. I would like to see that uplift at the heart of an island settlement that is then, frankly, increased. I am very grateful for the £1 million, but it is not a great deal of money.

To sum up, I am very grateful to the Minister for listening so closely and I really appreciate the work he is doing on this issue. It is a complex area and he is trying to balance lots of things. I would say that a significant uplift for the Isle of Wight is effectively an accounting error for most large councils. Relatively modest sums would make a great deal of difference. For example, they would enable us to keep our regeneration team. We need that team. We had two levelling-up bids accepted, which shows we need the money, and that we had the professionalism to put good cases and go out and get it. If we have no non-discretionary spending at all, it makes it very difficult for us to build a future that we want for our islanders.

The Isle of Wight is an exception to the current rule. I think that is wrong and that we are seeing an historic injustice. The study suggests that our island status, the fact of being the Isle of Wight, makes it between 4% and 25% more expensive—between £10 million and £60 million—to provide similar sets of services. I urge the Government and the Minister to continue to talk with me and, on the first point, to recognise that the island should be treated the same as other islands separated by sea, and secondly, to work to provide a realistic figure that will make a difference to my constituents and my council.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Simon Hoare)]

I congratulate my hon. Friend the Member for Isle of Wight (Bob Seely) not only on securing this important debate, but on advancing the argument in the way that he did. Let me also add my thanks to Wendy Perera, the chief executive of my hon. Friend’s council, to Councillor Phil Jordan, its leader, and, of course, to Chris Ward, the section 151 officer. They all work very closely with my Department, advocating for the Isle of Wight as my hon. Friend does, and my Department and I are very grateful to them for their engagement over this period.

Let me start by saying that the Government are, of course, committed to serving the needs of diverse communities across our country. This debate has provided an excellent opportunity to discuss the Island communities for whom my hon. Friend has long been an effective campaigner. As he mentioned, my predecessor visited the Island recently, and found it immensely helpful to hear from local voices about the issues faced by Island authorities.

I now have a confession to make. I have never visited the Isle of Wight. If my hon. Friend would like me to undertake a state visit with full pomp and ceremony, with flags and with town bands playing, I should of course be delighted to accept. I must warn him that I do get a little seasick, so we had better choose a slightly calm sailing day.

I have heard what my hon. Friend has had to say, as has my predecessor and as have officials in the Department. I say this in no way to rile him, and he should not take it personally—in fact, I know he does not—but having been in this job for nine days and in this place for eight and a half years, I have yet to see any right hon. or hon. Member doing cartwheels up and down the Library Corridor or across Central Lobby while declaring how perfectly satisfied they are with their local government settlement. There is always room for improvement.

My hon. Friend, and the House, will know that the local government finance settlement is in progress, and I want to give as much correct information in as timely a fashion as I can throughout that process to local councils across the country. Against that backdrop—very much early doors, as it were—I know my hon. Friend will appreciate that I cannot and will not pre-empt the formal process of determination and decision making, but I hear very clearly what he has said both in this debate and in representations. He kindly acknowledged that he was in receipt of my letter of today’s date—which shows that the systems are working—and it may be helpful if I read some of it into the record. It includes these words:

“we have concluded the evidence-gathering part of this process and I would like to take this opportunity to once again thank you”—

—my hon. Friend—

“and the Isle of Wight Council for your co-operation throughout this process. Island funding is an issue that you have raised with the Department numerous times, and I am pleased we have progressed this issue to this stage.

My officials are currently assessing the evidence submitted by your council and intend to share a draft of the report for comment to…Council officers in due course.”

Let me assure my hon. Friend that this will happen during the process of making final determinations on the funding settlement, not afterwards. It will be done in a timely and sequential way.

My letter explained that the council officers

“will then have the opportunity to comment on the report and my officials are happy to respond to any further questions and comments”

that may arise from that process—as, of course, am I.

A go-to phrase of Ministers at the Dispatch Box is to refer to a right hon. or hon. Friend as a “doughty champion”. That phrase sits well in the parliamentary vocabulary, but if it were to be worn as a crown—I say this in all sincerity to my hon. Friend, and I hope it gives confidence to his constituents and to those other deliverers of public services across the Isle of Wight— then, based on the list of correspondence and strong representations he makes not only to my Department but to Departments across Government, that crown would fit his head as if bespokely tailored. I congratulate him for all he does on behalf of his constituents, who should be very proud that they have such a doughty champion.

Let me turn to the hard figures. As a statement of principle and fact, we recognise the key role that local government plays in and across our communities. The word that we share is, of course, “government”—central and local. So long as the Prime Minister keeps me in post, I want to advance cordial relations and co-operative and collaborative working. Whether in town hall or Whitehall, we are all focused on serving people’s needs, and very often those people are among our most needy and vulnerable constituents. The work done by local government in helping to meet those needs is profound and widely recognised.

This year’s local government finance settlement for the Isle of Wight was £162.9 million—a more than 10% increase in core spending compared with the previous year. As the local authority has responsibilities for social care, the demographics of the Isle of Wight will throw up particular challenges, as do the demographics in many rural areas across the country. I know the council benefited from the additional social care funding announced last year, receiving an increase of over £4 million in its social care grant allocation. That was in addition to funding from the improved better care fund and the market sustainability and improvement fund. The increase was above the 9.4% average for local authorities across England. Overall, the Government made available up to £59.7 billion for local government—an increase in core spending power of up to £5.1 billion compared with 2022-23.

My hon. Friend is correct to say that the challenges and opportunities faced by island communities differ greatly from those facing other authorities in England. The separation from the mainland by water can lead to increased costs in some areas. I pause for a moment to say that, as a Member of Parliament for a rural constituency, I have long argued in speeches and representations to Ministers from the Back Benches that the additional costs of delivering public services in a rural area should be taken into account. Of course, we do that through the rural services delivery grant.

[Bob Seely]

I completely accept the argument about isolation in a rural area, be it Dorset or Cumbria—a large part of the Isle of Wight qualifies as a rural area, too—but there is a specific additional cost that comes from ferry use, in terms of time, funds and the greater difficulty in sharing services. Does the Minister accept that point?

[Simon Hoare]

The fact that the best way to get to the Isle of Wight is by ferry is not something that any Minister of the Crown would wish to dispute with anybody who lives on the Isle of Wight. That is, of course, true, and I will turn to that in a moment. I hope my hon. Friend recognises that the Government have taken it into account, and I intend to continue taking it into account in my deliberations.

It is, of course, for that reason that the Government have consistently stood alongside the islands of our country to provide additional support in recognition of the unique circumstances they face, as my hon. Friend has set out for the House this afternoon. As he will be aware, the Isles of Scilly, for example, receives bespoke funding at the local government finance settlement for that. Our response to my hon. Friend’s previous calls for the Government and my Department to recognise that has been that in recent years, as he has noted, we have provided an additional £1 million in grant funding to the Isle of Wight, in the light of the exceptional circumstances faced by the authority.

I am certain that he would have liked that money to be more, but, again, I say to him that the Government and I have to take decisions in the round, against the backdrop of a series of interdepartmental calls for public money and very strong calls for public money within the Department for different elements of the delivery of local government. That is why I said earlier, not as some flippant point, but as a serious one, that he should not take this personally. I receive and am receiving representations from Members from across the House and from across the geographies of our kingdom about how the Government will support local government this coming year.

Let me say a word or two about the evidence base and evidence gathering. My hon. Friend has mentioned that my Department has worked productively with the Isle of Wight Council this year on evidence gathering, to help us better understand the additional costs faced by the Island. As he highlights, it is challenging to quantify an island effect, but I hope he will agree that the joint work on the evidence gathering exercise has been a valuable process, both for the Isle of Wight and for the Government. Let me assure him and, through him, his constituents that my Department and I will make the very best use of this information, provided by the Isle of Wight Council, in order to come to a decision.

Too often, I fear, these things are commissioned and looked at, and then someone realises that a window with a slightly dodgy sash needs a bit of a prop if they are to have ventilation and these reports are used for that purpose, or for propping open a door while people are coming in and out. The documentation submitted will be on my desk and it will be at the forefront of my mind when I look at the figures on the settlement for the coming financial year. As always, we will be announcing our proposals, which are subject to consultation, in the upcoming local government finance settlement. We will do that in the usual way later this year.

The autumn statement, which many have welcomed, was comparatively late this year, which means that my officials and Department will have to work at pace to get the figures out to local authorities for them to think about their draft budgets and for us to undertake our consultation. I have set two challenges for my officials. Let me pause to say, albeit having been only nine days in the job, that I have unchallengeable support and admiration for them. They are the most phenomenal team of public servants, who are fully seized of and alert to the challenges of delivering public service in the local government arena. They have risen to the challenges I have set them and accepted them with alacrity. The challenges are that the data that we provide to local authorities must be delivered in as timely a fashion as possible; and, more importantly, that any figure work that we provide to them must be correct and beyond peradventure.

[Bob Seely]

My hon. Friend will be delighted to know that the invitation to visit the Isle of Wight is in his private office as we speak. Tennyson used to invite people in poetry, but I am afraid that, just because of the time, I have done it in prose. For many of the figures that he is talking about, we will be able to get Chris, Wendy and others, including the NHS, to come to talk about the additional costs. We hope that he will be able to see proper, physical, practical examples to back up the numbers that we have provided.

[Simon Hoare]

I am grateful to my hon. Friend for his uber efficiency in organising such a trip. My Speedos will be dusted off—don’t get excited, Mr Deputy Speaker—and I hope to share a 99 with him at some bracing seaside venue. In sincerity, I am grateful to my hon. Friend and I look forward to that hugely.

To draw my remarks to some form of conclusion, I hear the representations that my hon. Friend has made. In turn, I hope he has heard my total commitment from the Treasury Bench to studying with great care, as my predecessor did and as my officials do, all and any submissions made by him and his council. We hope to arrive at a circumstance and solution that works for the people of the Isle of Wight.

Government support to the Isle of Wight, as my hon. Friend was kind enough to reference in his remarks, is manifest outwith the local government finance settlement. We are investing in key capital projects across the Island, as part of our aim to level up all parts of the country. The fantastic and magnificent work of the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for Redcar (Jacob Young) is testimony to that. In recent funding announcements, the Island has benefited from £20 million for the town partnerships endowment, which will support the town of Ryde in the development of a new long-term plan; £5.8 million in round 1 levelling-up funding to the East Cowes marine hub; and, only this week, £13.6 million from the levelling-up fund to deliver the Island green link, providing cycle and walking infrastructure extending from Ryde in the east to Yarmouth in the west of the Island.

I am grateful to my hon. Friend for raising the issue. While I am not able to give him the figures in pounds, shillings and pence, I hope I have been able to persuade him of the seriousness with which I take his case and with which I will approach this issue over the coming weeks and months. I am committed, as are the Government, to doing as much as we possibly can to ensure our fantastic councils, not just in the Isle of Wight but across the United Kingdom, can work alongside us and deliver for all of our constituents.