Funding for Local Authorities

David Ruffley Excerpts

Thursday 10th October 2013 Commons Chamber

[Mr David Ruffley (Bury St Edmunds) (Con)]

I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) and the rural fair share group and our chairman, my hon. Friend the Member for Beverley and Holderness (Mr Stuart), who has been the spiritual leader of our campaign to draw Ministers’ attention to the injustice—that is not too strong a word—that many rural district councils feel about the settlements over the past two years, particularly the freezing until 2020 of our iniquitous position.

I want to pay tribute to one particular rural district council in my constituency, namely Mid Suffolk district council. It is a small district council, but under the exemplary leadership of Councillor Derrick Haley from Thurston it has done a lot of what the Government want. It is a Conservative-led council—not that that is a particularly important thing to note—and it has been following the strictures set by the Secretary of State and the Minister. In particular, in less than two years it has effected a collaboration with the neighbouring Babergh district council, so the two councils are still sovereign councils but they operate as a single delivery organisation.

I will give some remarkable statistics on the efficiency savings that Ministers have rightly demanded of Mid Suffolk district council. It is not one of those district councils that is sitting on piles of reserves. The Audit Commission’s financial ratio tools show that the council’s usable reserve levels, compared with gross expenditure, are under 10%. That compares favourably with the district council and statistical nearest neighbour average of nearly 25%.

One result of the work that has been done by Councillor Haley, the chief executive, Ms Charlie Adan, and the rest of the council is that the management headcount is down by 50%, with further reductions projected. There is now one chief executive for two councils, rather than two. There has been a comprehensive review of all other staff and there has been an 11.2% reduction in the staff headcount. There has been a 9% annual net revenue saving. Solely through collaboration with the neighbouring council, Mid Suffolk district council took £1.3 million out of what was already quite a small budget in 2012-13, which is more than was anticipated in its business case. Another £1.3 million of savings is anticipated in 2013-14. That might rise to £1.6 million.

The target of the rural fair share campaign is to reduce the rural penalty from 50% to 40%. I was delighted to hear the hon. Member for North Devon (Sir Nick Harvey) say in his excellent speech that that might even be a little complacent. I am with him in spirit. I look forward to his leadership as the new chairman of the group.

I want to underline an important point that has been made by other colleagues in this well-informed debate. In the 2013-14 settlement, the impact of the sparsity element was approximately doubled. That good news offered a huge ray of hope, as my hon. Friend the Member for Beverley and Holderness said in an intervention. Mid Suffolk district council was pleased with the news. However, nearly all the changes to the formula for that financial year were damped away. The calculation that I have seen is that three quarters of the gains that rural councils expected from that sparsity change were damped away. To put some numbers on that, damping cost Mid Suffolk district council almost £800,000, which amounted to 16% of the council’s grant. I wonder how the Minister can justify that.

The proposal to top-slice a significant sum of the new homes bonus that would have gone to district councils and put it into the single local growth fund for the LEPs will have a severe impact on the medium-term financial plans of Mid Suffolk district council. The inclusion of the NHB in the new growth fund will potentially damage the growth prospects in two-tier areas such as mine.

I understand why the NHB is being vired over to the LEPs: it is meant to facilitate better collaboration between the local authorities in LEP areas. However, there is a justified view that that amounts to a penalty on district councils. Why so? The Government believe that it will reward LEPs in areas where authorities have delivered housing increases. However, it is not easy to see how the LEPs add much value to increased house building, because that is what councils do. Mid Suffolk district council is being bold and saying that new houses are needed in its area instead of acting in a nimby-like fashion. It seems to me that the LEPs are being rewarded with the power to redistribute income that they have not had much to do with generating through the building of more homes.

Mid Suffolk district council’s view, with which I agree, is that if the LEPs are to be given that power, as is proposed, we should measure their productivity to work out what they actually do in exchange. As far as I can see, there is no measure of productivity at all except the number of new houses and the amount of money that will be generated through the new homes bonus, which is what councils do.

Furthermore, it is important to understand that if the money is given to the LEPs—in my case, the LEP covers the whole of Norfolk and Suffolk—it will work against localism, which should surely dictate that the rewards go to Mid Suffolk district council for achieving more house building. They should not be put into a pot for the whole of Norfolk and Suffolk for the LEP to do with as it sees fit.

Mid Suffolk district council is innovative and has helped to deliver the astonishing and heartening statistic in the BBC-ICM poll published last night, which is that in the majority of services—potholes and services for old people are the exception—six out of 10 of our fellow citizens believe that services have got better in the past five years, notwithstanding the fact that austerity started to kick in in 2009 and accelerated from May 2010.

[Andy Sawford (Corby) (Lab/Co-op)]

Will the hon. Gentleman give way?

--- Later in debate ---

[Mr Ruffley]

I am just coming to the end of my remarks, so I will continue if the hon. Gentleman will allow me.

That amazing result is being delivered by go-ahead, innovative councils under great leadership, such as Mid Suffolk district council. On top of my remarks on the new homes bonus and my plea for the Minister to look again at the effect of damping, through which Ministers gave to rural district councils with one hand and took away with the other, I end with a final plea. My hon. Friend the Member for Penrith and The Border (Rory Stewart) rehearsed a statistic that those of us in the rural fair share campaign know off by heart—that a 0.25% shift in the allocation would go a long way towards closing the rural penalty. I particularly look forward to the Minister’s answer to why that 0.25% out of a very large budget cannot be delivered to rural shire district councils, particularly those such as Mid Suffolk.