Local Government Funding: Rural Areas

Dan Poulter Excerpts

Monday 11th January 2016 Commons Chamber

[Drew Hendry]

This is a common red herring that is introduced into the debate on Scottish funding. Scottish GDP is roughly the same as English GDP, and oil is a bonus for Scotland. When the price goes back up, obviously, the Treasury will continue to benefit from that bonus.

One of the first things that the Scottish Government did in 2007 was to decentralise local government funding by removing ring-fencing. Today, I am delighted to confirm that the Scottish Government Community Empowerment Minister has announced a £500,000 fund for a pilot scheme for people to take part in participatory budgeting in rural areas, giving people a direct say in how investment should be taken forward in their communities.

Health and social services in Scotland are to be delivered in partnership between health boards and local authorities. The Scottish Government are also taking action to support rural hospitals in recruiting and retaining their medical staff, ensuring that patients receive safe care. In some areas that will involve rotating staff between rural and urban hospitals to ensure that we continue to provide services close to communities. That work has already delivered early success in supporting general surgical services in Belford hospital. Working with NHS Highland, the Scottish Government are now putting in place a network between Caithness general hospital and Raigmore hospital in Inverness, rotating staff between the two hospitals. This will support the delivery of the majority of surgical care and all out-patient care close to the community in Wick, while NHS Highland engages with local stakeholders to develop options for high-quality, safe and sustainable services throughout Caithness.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

The hon. Gentleman has mentioned medical recruitment and retention in Scotland. I do not wish to reflect on the challenges that we have in England, but there are challenges in Scotland in psychiatry and general practice recruitment that are probably worse than those in England. Will he please reflect on whether the increased funding settlement in Scotland compared with that in England is beginning to bear fruit, or whether the challenge has actually worsened over the past two or three years under the current measures?

[Drew Hendry]

Funding for Scotland has been drastically reduced over the past few years. We recognise the fact that we need more medical professionals, and that is why a comprehensive support package for training is in place in Scotland.

The Scottish Government have also committed to working with local authorities to develop stronger and more productive relationships between central and local government in order to develop real benefits for the people of Scotland. The Scottish budget for 2016-17 for local government has taken place against a backdrop of the toughest public expenditure conditions we have faced. This is the austerity of choice not of necessity, and it has been rejected wholesale by the people of Scotland. Between 2015-16 and 2019-20, Scotland’s total budget will be reduced by 4.3% in real terms. Scotland’s total discretionary budget will be cut by £1.2 billion in real terms, or 4.2%, and funding for day-to-day public services —the fiscal resource—will be cut by almost 6% in real terms, or £1.5 billion.

Between 2009-10 and 2014-15, Scotland’s budget has fallen by around 11% in real terms, with capital expenditure falling by around 34%. This means that our budget has been cut by a staggering £3.5 billion in real terms since 2009-10. As a result of the autumn statement, the Scottish Government’s revenue budget will be cut by 5.7% in real terms over the next four years. However, Scottish local government finance settlements have been maintained on a like-for-like basis for the period from 2012 to 2016, with extra money for new responsibilities. This has resulted in a total settlement of £10.8 billion in 2014-15 and more in 2015-16, allowing rural local authorities and others to perform their duties.

Additional funding has been made available for health and social care, local authority school budgets and support to ensure that the council tax freeze is maintained for its ninth consecutive year. I have to say I agree that once we let the genie out of the bottle and increase council tax year on year, that is exactly what will continue to happen: it will increase year on year. The sum of £70 million is included in the settlement to continue the council tax freeze for a ninth consecutive year, which in turn continues to fully fund local authorities for the moneys that would have been collected by raising the council tax.

While I am on the subject of the freeze on council tax, it should be remembered that before the Scottish National party came to power and agreed the freeze with the councils, this most regressive of taxes had been going up every single year. That was hitting the poorest households and pensioners the hardest. During the 2007 election campaign, I knocked on the door of a constituent in Fort Augustus who was in tears at the thought of yet another pressure on her household purse because of the threat of an increase in council tax.

This measure has now saved the average family some £1,500 at a time when they find themselves most under pressure. Those advocating a return to increasing council tax should remember that that would be likely to result in a return to the yearly default of ever-higher council taxes, with services remaining under pressure due to the UK Government’s austerity obsession. This tax is applied not only to those who can afford a little bit more but to those who cannot withstand yet another squeeze on their ability to put food on the table or to heat their homes.

The net revenue reduction for local authorities next year will be £320 million. That amounts to a reduction of 2% of the total expenditure of local authorities. It is a challenging settlement. However, that does not take account of the additional allocation announced by the Deputy First Minister of £250 million for social care.

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[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.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

My right hon. and learned Friend is making some very good points, particularly on adult social care. We are finding that, increasingly, people choose to retire to rural areas, where life expectancy is higher. Adult social care is the part of the upper tier local authority budget that is increasingly suffering from great strain. Does he agree that, when we are looking at local authority budgets and at the demographic needs of rural areas, the increasing pressure on adult social care budgets and the increasing number of people requiring adult social care in rural areas because of that demographic shift to an older population is something that needs to be put into those budgets today? We also need to future-proof those budgets and the projected increases in Government spending in the years ahead.

[Sir Edward Garnier]

I am sure that that illustration applies both to my county of Leicestershire and to my hon. Friend’s county of Suffolk. As a doctor, he will have seen how that matter touches on his constituents directly. Certainly in Leicestershire, 50% of the £350 million revenue budget is spent on adult social care. If my hon. Friend is right, that percentage can only go up as we move through this Parliament and beyond it, so the points that he makes have even greater purchase than perhaps he might have initially thought. It seems, too, that the scope for savings is necessarily restricted. As a result of the provisional settlement, Leicestershire needs to save £28 million in 2016-17, increasing to a total of £83 million by 2019-20 just to ensure that it is living within its means. That is on top of savings that the county has already achieved of £130 million.

I do not pretend to have an instant solution to any of this; I do not suppose that any one of us does, but I urge the Government to think a little more intelligently about how it deals with local government finance and how it distributes what is accepted to be a limited pot of money across the country. Without wishing to be rude to the hon. Member for Inverness, Nairn, Badenoch and Strathspey, I urge Members to forget about Scotland for the moment—it is a difficult thing to do, but we will do it just for this evening—and to call on the Government to work out what is fair. A poor person in Harborough is no better off than a poor person in inner-city Leicester. A poor elderly person in Harborough needs as much financial support as a poor elderly person in the city of Leicester. I appreciate that there will be rough edges and that there is no perfect solution to the problem, but I am reasonably sure that there is a better solution than the provisional settlement that we are looking at now.

Leicestershire is a well-behaved Conservative council—I do not mean that in a pompous way, although I have been accused of many things and pomposity may be one of them. It believes in using taxpayers’ money well and in getting good value for every public penny spent. We are not about to initiate some sort of riot or revolution in Leicestershire County Council. We are just asking for a bit of fairness—not a difficult thing to ask for. Although I do appreciate that that is hard to deliver, I none the less think that the Government should try just a little bit harder.

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[Sue Hayman]

I thank the hon. Lady for that intervention. I am grateful that I have two of my hon. Friends in front of me, but I take her point. To me, rural issues should not be party political issues. Everyone who lives in a rural community is entitled to be represented by both parties, by the Scottish National party and by other parties that are not represented here today. I have discussed these issues with other Members. I know they are interested and I would have liked to see more of them in the Chamber this evening. I cannot deny that.

On another transport-related issue, let us look at the impact that lack of funding has had on our bus services. Owing to the reduction in funding for Cumbria county council, we have unfortunately lost a number of bus services as the county could no longer afford to pay the subsidies. In a rural area that is a real worry. In Cumbria, anyone who cannot afford to buy and run a car, or who cannot drive, is cut off from accessing services or even from being able to get a job and go to work. In the village where I live, we have a bus to Cockermouth on a Wednesday, which is fine for people who want to do a bit of shopping or meet some friends, but is not much good for anyone who needs to get to work. That service is now under threat. We could lose that important lifeline for the elderly people who live in my village.

My daughter was unable to get a job until she passed her driving test. It is not cheap for a young person to pass a driving test and it is not easy to do so—it took her three goes, but she passed and she now has some work. That situation puts extra pressures on our young people and does not encourage them to stay and live in our communities.

These huge costs of transport make it difficult for the local authority to deliver services across the board. Those transport costs are a factor in the delivery, for example, of social care, as has been discussed. Another example is waste collection. Studies have shown that it costs almost double the amount to collect a bin in a rural area, compared with an urban area. It is not just a little bit more expensive; it is much more expensive.

The public health funding model does not take into account the significant cost of running services in rural areas—again, because of the transport costs and the distances that need to be covered—so we risk letting down the people who live furthest from the centre. The people on the edges are often missed because of the difficulty in delivering those services. That is exacerbated by the fact that our population is ageing. If our population is ageing, does not want to drive and is experiencing more health problems, it seems crazy to me that we do not have sufficient funding to allow older people proper access to the health services that they need.

We have had a campaign running in Cumbria for some time to ensure that services from West Cumberland hospital are not moved to Carlisle and beyond that to Newcastle. It is still a long way for people in my constituency to go to Whitehaven to access services there. If we lose that, it becomes more problematic. Recent events in Cumbria and the number of road closures and bridges damaged show the paucity of our roads infrastructure and the further problems that that causes. We need proper funding so that the county council-maintained roads can be properly managed; otherwise, there is the risk of dreadful isolation in communities in rural areas.

Hon. Members have spoken about rural poverty. Pockets of rural poverty are very real, but often missed. If we do not have proper outreach services, we do not know what people need. As I said, people in rural areas tend to be quieter about their requirements. We could go down a dangerous route if we are not careful. We need to make sure that everyone has the services they need and that they can access employment properly. Unless we do that, we simply pile on the deprivation and do nothing to support those who need help most.

I shall move on to another issue, which I wish I did not have to do. The Government have suggested on a number of occasions that local authorities can make cost savings by prioritising internet-based services and advice. I do not know what it is like for other hon. Members, but I do not want to get bogged down in the lack of access to broadband in my constituency. It makes me want to tear my hair out.

[Dr Poulter]

The hon. Lady makes an important point. Broadband access, as we know, is not as easily available in rural areas as it is in urban areas. Also, given the demographic issues that have been discussed during the debate, we know that there is a challenge with the very elderly, despite the best efforts of local charities and outreach groups in many of our constituencies to get them to engage with digital technology. That is not to say that all older people do not engage, because some do, but with the very elderly there is a particular challenge, and those people can be the among the most vulnerable in our communities.

[Sue Hayman]

I thank the hon. Gentleman for that important point.

One of the problems with broadband is that too many assumptions are made about what we can achieve in rural areas. What I find most frustrating is that as the superfast broadband connection is rolled out in some areas, where we are not getting superfast we are getting super-super-slow as the speed goes down and down. By making it better for some people, we are creating a huge problem for others. I urge the Government not to tell hon. Members and their constituents that they should be accessing internet-based services, when it is incredibly difficult and frustrating to do so. We should either fund broadband properly or accept that we need to look at different solutions.