Local Government Finance

Derek Thomas Excerpts

Wednesday 22nd February 2017 Commons Chamber

[Derek Thomas (St Ives) (Con)]

It is a pleasure to follow the hon. Member for St Helens South and Whiston (Marie Rimmer). I echo the praise from my right hon. Friend the Member for Broxtowe (Anna Soubry) for councillors and the amazing work that they do. I particularly want to pay credit to the parish councillors who are working so hard to cover the gaps left by Cornwall Council, in my neck of the woods, as it retreats from delivering services in our rural areas. The parish councillors are doing jobs that they never expected to be doing, but they are doing fantastically. We need to do what we can do to support them.

I am really looking forward to the review of funding allocation for local government, but I want to refer particularly to the Council of the Isles of Scilly and the pressure that it is under. I am privileged, as a Member of Parliament, to represent a constituency with off islands. The Isles of Scilly had their own unitary authority long before everyone else followed suit. The islands are home to 2,200 people and are an incredible and unique environment.

The council is a stand-alone, single-tier unitary authority. Unlike other local authorities, it has no means of devolving powers to local parishes. The council’s responsibilities are extensive. I am visiting the islands this Friday and Saturday, and it is no exaggeration to say that almost everything I see, touch or use while I am there will be the council’s responsibility. It is in charge of public safety; it operates the airport on St Mary’s; it runs Park House care home, which is the only residential care home on the islands; and it maintains the islands’ swimming pool and other leisure facilities. It is the only local authority in England and Wales that also acts as a water authority, providing water to some 1,070 homes on St Mary’s and Bryher, as well as the sewerage infrastructure across St Mary’s. That is a huge undertaking, and the council is the first in England and Wales to do so. Unfortunately, the fact that it owns next to no public assets that can be used to raise council revenue makes fulfilling those responsibilities more difficult. In fact, most of the land on the islands is owned by the duchy, so house building is a particular challenge.

In the local government financial settlement, the Isles of Scilly’s proposed allocation fails to take into account fully the uniqueness of this unitary authority. The provisional new homes bonus has been reduced by £22,200. The new adult social care support grant allocation is only £12,700—a reduction of nearly £10,000. The proposed improved better care fund allocation is zero. In the light of the fact that residents on Scilly have high needs but a very low council tax base, this funding decision does not appear to be fair or to recognise the specific needs of this remote island community.

The allocation for the rural services delivery grant is still zero, despite the assurances given by civil servants in 2016—the Secretary of State will be pleased to know that this was before his time—that they would look closely at that issue. There is no more rural an area than the Isles of Scilly, yet it gets no rural services delivery grant whatever.

During my visit to Scilly this weekend, I will discuss the challenges it faces in transport, adult social care, housing and marine safety. Ever since I was elected in 2015, I have been working with the council and Ministers—they have been keen to help and support us—to ease some of the pressures, particularly the pressure on council finances. This task has been made more difficult by the fact that the current funding allocation does not reflect the specific challenges and costs faced by Scilly. Right now, there is a real risk to the social and leisure amenities on the islands, and there are fears—I have had a number of emails just this week—that the care home will no longer be able to stay open. That is partly to do with funds, but it is also to do with the difficulties of attracting the staff needed, because of a lack of housing and an inability to build more.

Members of the Council of the Isles of Scilly are of course working hard to identify how to save money and become much leaner. Over the years, the council has worked extremely hard to become much leaner and more efficient, and it has probably become as lean as it possibly can, yet the pressure is on for it to make further savings, remain viable and ensure that it delivers a sustainable future for the islands. As such, the current funding proposal places increased pressure on a small council with huge responsibilities, threatens essential public services and leaves an undeniable need for reconsideration. As I say, a review of council funding is certainly needed for the Isles of Scilly.

I want to move on to the mainland part of my constituency and to business rates. The truth is that many businesses in Cornwall are small, and many in my constituency are being taken out of business rates altogether. That is hugely welcome, and the Government have achieved a fantastic piece of work. However, I have the rather peculiar situation that independent stores in the town of St Ives, which accounts for only about 8,000 people out my whole constituency, will have business rates increases sometimes of 62% or even of well over 100% this April. In fact, across the independent businesses in the town of St Ives, the average increase is 24%, which is particularly difficult.

I listened to the Chief Secretary to the Treasury talk about the prosperity of St Ives on Radio 4 at the weekend, but the reality is that while big businesses there certainly are prosperous—they can cope with difficult times, particularly during the winter months when there is just nobody around—independent businesses, which rely on doing their business for a few months in the summer, are required to pay business rates all year round however successful or unsuccessful they are.

[Neil Parish (Tiverton and Honiton) (Con)]

There are definitely winners and losers from the business rates review, but many farm tourism businesses—farm cottages, riding stables and others—are being given a much greater value and their rates are going up 60%, 70% or 80%. That is just too much for those businesses, and we need the Government to help them in some way.

[Derek Thomas]

I welcome that intervention, and that is absolutely the case.

In total, 32 independent businesses have contacted me just from the town of St Ives alone. One business will see its business rate rise from £2,000 to £3,000 a week, but this small high street business already faces considerable charges from operating in that town. Some businesses are saying that there is no way that they will remain viable or can continue.

I want to raise something that would never have been the intention of a Conservative Government. In Penzance, all the supermarkets will see a drop in business rates of about 15%, but business rates for high street businesses are going up by 10%. I cannot believe that that was ever the intention of a Conservative Government, and I very much want that unintended consequence of the review to be reversed. I think that I have said all I need to say.

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[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I do not think we will go down that path.

[Derek Thomas]

I welcome that intervention. My hon. Friend the Member for St Austell and Newquay (Steve Double) often refers to the fact that the Liberal Democrats talked about fairer funding for many years, but that it is only since 2015, when Cornwall elected all Conservative MPs, that we have really seen progress.

[Norman Lamb (North Norfolk) (LD)]

The temptation was too great.

Does the hon. Gentleman share my concern that between now and 2020 predominantly rural areas, including Cornwall and rural Norfolk, will lose out and that the proportion of total spend from council tax payers in rural areas is significantly greater than that in urban areas? This is happening under a Conservative Government. Is he concerned, as I am, about the impact on rural areas?

[Derek Thomas]

I welcome that intervention, if only to say that that has been covered in the previous two and a half hours of debate.

If we were able to achieve fairer funding for schools, police and health and fairer support for local government, and for that to be in permanent legislation, that would be a significant result that south-west MPs could celebrate. For many, many years that was unobtainable.

I will bring my speech to an end by asking the Minister to look at the Isles of Scilly immediately. The pressures are there now and we need to do what we can to help. It is not right that older people face having to move off the islands to receive residential care. Please look at the situation in St Ives and Penzance, where supermarkets seem to be benefiting from the new arrangement. High street shops are the backbone of our local economy. They drive our economy across Cornwall, yet they seem to be the unintended victims.