Local Government Finance (Rural Authorities)

Graham Stuart Excerpts

Monday 11th February 2013 Commons Chamber

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

I beg to move,

That this House has considered the matter of the local government finance settlement for rural local authorities.

We have only a short time for this debate—just over an hour. We were expecting a three-hour debate, but unfortunately we have been squeezed by various statements during the day and a substantial debate on Europe. However, I am happy to take interventions and will try not to speak for too long.

One can tell by the number of Members in the Chamber that this is a very important debate—on the share of grant that rural authorities are receiving from Government —that we take extremely seriously. I very much welcome the meetings I have had with the Minister and the sympathy he has shown. What we want to do this evening is take away not just sympathy but a little money, which is a little easier to put in our pockets.

The Department for Communities and Local Government announced the local government financial settlement for 2013-14. It will reduce central Government support to councils while doing nothing to address the long-standing inequality in funding between rural and urban councils. We are not asking for a change in the Government deficit reduction strategy, as we support the Government in taking tough decisions to tackle the budget deficit inherited from the previous Administration; a quarter of all public expenditure is accounted for by councils and that must be addressed. Instead, we are here this evening, even at this late stage, to press the Secretary of State to revise the proposed settlement and make good on the long-standing promise to correct this historical imbalance and give rural local authorities their fair share of central Government funding, in line with the summer consultation.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Does my hon. Friend agree that the rural penalty, which sees 50% more per head going to urban councils than to rural councils, cannot be justified, even by increased levels of deprivation in the urban areas? The additional cost of delivery in rural areas and of need in rural areas means that there is a demand across the country for a fairer settlement.

[Neil Parish]

I thank my hon. Friend for his intervention, because I was going to say how much I thank him for his support. He chairs the Rural Fair Share campaign, and I thank him for pursuing this issue with Ministers with such tenacity and for helping to secure this debate. I agree with him entirely that the current situation just is not fair. We are not here to rob urban authorities of their money, but we are saying clearly to the Government that there are inequalities and they must be put right.

--- Later in debate ---

[Mr Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in this debate.

I chair the Rural Fair Share campaign with my hon. Friend the Member for North Cornwall (Dan Rogerson) and the hon. Member for Workington (Sir Tony Cunningham). The campaign has support across the House, as the hon. Member for Bishop Auckland (Helen Goodman) suggested in her powerful speech, which I hope Ministers listened to closely.

The hon. Member for Bishop Auckland highlighted the cost of delivering services. One does not need to be a public service economist to understand that point; one just needs to look at a map. If one adds to that the fact that rural areas have older populations than urban areas—populations that are ageing quickly—and the costs of domiciliary care, one can feel the immense pressure that there is on the system in rural areas.

As has been said, rural areas have been poorly funded for a long time compared with urban areas, despite the fact that the costs of delivery are often higher. Overall, rural residents earn less than people in urban areas, but pay council tax that is £75 per head higher. Therefore, rural people, having paid more out of a lower income base, have a level of spending power for services that is lower than that in urban areas. There is no evidential base for that fundamentally unfair situation. That is the point that I hope Ministers will take on board.

There is a rural penalty that sees urban areas get 50% more per head in central Government funding than rural areas. That position is indefensible. If it is not indefensible, we would like the Government, who must have done the analysis, to explain to us why it is just and reasonable for people in rural areas, many of whom are elderly and on low incomes, to be so unfairly treated.

[Sir James Paice]

I am grateful to my hon. Friend for giving way. I know that I am not on your list, Mr Deputy Speaker, but I want to challenge my hon. Friend because he has rightly referred to the Department’s statistics and comparisons. Over the past few weeks since this has become a topic of such serious concern, there has been a lot of dispute between Ministers and sparse rural local authorities. Will my hon. Friend spare a minute or even half a minute of his speech to explain what that difference of opinion is and why those of us who represent rural local authorities differ seriously from the Department?

[Mr Stuart]

I thank my right hon. Friend. I will explain the position. A year ago, a delegation went to see the Prime Minister to deal with this issue. In the summer, the Department consulted on a new way of looking at things that recognised the increased cost of sparsity in the formula. It came out with a figure that looked very promising in respect of reducing the 50% rural penalty. It then damped 75% of the gain away so that there was a 2 percentage point closing of the gap from a 50% rural penalty to one of merely 48%.

When the December settlement came out, our first analysis showed that that 2 percentage point gain had been wiped out. In fact, it had been entirely reversed and we were looking at a 2 percentage point increase in the rural penalty. We met the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who is responding to this debate—he has been most helpful in having meetings—but we struggled to get the position of the officials on the numbers that the Rural Services Network had come up with. It turned out that 500,000 people had been added to the population of London. When that information is put in, the 2 percentage point increase per head turns into a 0.2 percentage point narrowing.

The good news, which I can share with the House, is that the Government’s settlement takes a 50% rural penalty and reduces it by 0.2 percentage points to 49.8%. As I understand it, that is why technically the Government can claim that there has been a narrowing of the gap. It is pretty minuscule and nothing like the closing of the gap that we were talking about in the summer, which even then was derisory. Ministers are right, if they are doing so, to hold their heads in shame at that situation. [Interruption.] Was that too harsh?

I say to those on the Front Benches that Members participating in this debate come from across the House. We are looking for a fairer settlement and we hoped and expected that the Government would look at the issue on an evidential basis. We are not seeing that and it is not good enough. There will be a vote on Wednesday, and I hope that those on the Front Benches will consider carefully the speeches made this evening. All Government Members support the need for austerity and strict control of the spending envelope, and we do not argue for greater Government spending. We are saying, however, that at a time of limited resources, the allocation of those resources is more, not less, important. It may be politically more difficult and challenging and take some courage, but if less resource is around, we cannot afford to punish further those who have already put up with too much. That is our message to those on the Front Benches, and I sincerely hope they will listen.

--- Later in debate ---

[Dr Sarah Wollaston (Totnes) (Con)]

Today we have seen a welcome announcement in the House: a rise in the threshold for eligibility to social care to £123,000 and the improvement of having a total cap on care costs. However, this will have huge implications for local authorities, because it will bring many more people into statutory eligibility for care. This will not come into force for several years, but the settlements in place now will have long-term implications for the future, and great implications for rural areas and rural authorities such as Devon, the fifth-oldest of all the local authority areas in England. The implications will combine with the similar kind of arrangements that occur, for example, in health.

Increasingly, there is a trend towards prioritising funding to address health inequality, rather than focusing on health need. The older one is, the greater one’s care needs.

[Mr Graham Stuart]

Ageist.

[Dr Wollaston]

It is ageist. We need to consider what elderly people require. How can we justify the fact that older patients in inner-city authorities have three times the amount spent on their cancer care than those living in a rural authority? For any condition that we might want to consider—be it diabetes, arthritis or dementia— rural local authorities’ needs will be higher. How do we justify to our elderly constituents, or to a carer for someone with dementia, that they are entitled to less? Why do we rate the value of an elderly person with dementia so much less in a rural area such as Devon than we do in an inner-city area?

We have to consider health inequalities, but other parts of the budget are more appropriately considered as modifiable areas for change. However, many conditions are not modifiable as health inequality issues. Will the Minister say what can be done to address health and social care needs? It is not just about addressing need, but the cost of delivering care. It might take a care worker in Devon 40 minutes to travel between appointments, whereas distances and costs will be far less in inner-city areas. There is also the consideration of whether a care worker can be found at all in many rural areas. Will those on the Front Bench consider the challenge of rurality? To be deprived in a rural area is to be additionally deprived. I hope that Ministers will address that by distributing funding more equitably to rural areas.

--- Later in debate ---

[Chris Williamson]

My hon. Friend draws attention to a real problem with the council tax freeze grant, as have Government Members this evening. Local authorities of every political persuasion have seen through the Secretary of State’s wheeze. For many local authorities, taking the grant would clearly create significant problems down the road. That is why we are seeing Conservative, Liberal Democrat and Labour authorities refusing to take the grant, for very good reasons.

We have heard contributions this evening from my hon. Friend the Member for Bishop Auckland (Helen Goodman), who we have just heard from again, and the hon. Member for Beverley and Holderness (Mr Stuart), who spoke passionately about the need for a fairer settlement—although, rather paradoxically, he also said he supported the Government’s austerity programme. It seems to me that he cannot have it both ways.

[Mr Graham Stuart]

This is about the allocation and getting a fair share—hence the name of the Rural Fair Share campaign. We were going to have to control public expenditure whoever was in office; this is about recognising the need to look even more carefully to ensure a fair division based on need.

[Chris Williamson]

I hope the hon. Gentleman would agree, however, that it would be completely unfair to impose even deeper cuts on some of the most deprived local authorities in urban areas. The real issue is that the Secretary of State volunteered to accept unprecedented funding cuts—far higher than those for any other Department—in local government. The blame rests fairly and squarely on his shoulders; he has let down local government in rural and urban areas alike.

We also heard from the hon. Member for Mid Dorset and North Poole (Annette Brooke), who made a significant contribution in calling for greater clarity about funding for local government. She made the point that there is no scope in her local authority for more efficiencies. She and others have seen through yet another scam from the Secretary of State: his “50 ways to save” document. Let me tell him that all local authorities have been doing that for years. I do not understand what he is talking about when he issues such a document. It might make a good soundbite in a press release, but he is not living in the real world.

We also heard from the hon. Member for Totnes (Dr Wollaston), who talked about the cost of delivering health and social care needs in rural areas and referred to the cost of rurality. It was interesting that the Secretary of State, sotto voce, did not seem to understand the term “rurality”. Perhaps that is an indication of the sort of problems that local government in rural areas is suffering from.

Finally, the hon. Member for Penrith and The Border (Rory Stewart) talked about the importance of communities, but when the Secretary of State agreed the unprecedented cuts in local government funding, he drove a metaphorical knife into the heart of local communities up and down our country.

--- Later in debate ---

[Brandon Lewis]

I thought that the hon. Gentleman had something to say that was different from what he had already said. Again, he avoided mentioning the £52 billion of cuts that his party had pledged to make. My point is that Government Members, including the Secretary of State, are standing up for the people whom we are elected to stand up for—the hard-working residents who will benefit from the council tax freeze that this Government are providing.

Let me say in the few moments that I have left that the thinking behind this local government financial settlement took into account ways in which councils can make progress in the years ahead, and that we believe it to be fair to both north and south and to both rural and urban communities. As others have pointed out, we have managed—although, I recognise, not to the extent that some would have liked—to reduce the gap between rural and urban. We have made adjustments to relative needs formulas to reflect the greater cost of providing services in rural areas. That is one of only three formula changes in the settlement. We have increased the weight of super-sparse areas in the formula, doubled the sparsity weight for older people’s social care, reinstated the sparsity adjustment for county-level environmental protective and cultural services, and introduced a sparsity adjustment for fire and rescue. As a result, funding per head is falling by less in predominantly rural authorities than in predominantly urban authorities, in all classes.

[Mr Graham Stuart]

Members on both sides of the House are concerned about the 2014-15 settlement and the position up to 2020. Can my hon. Friend assure us that Ministers will be willing to discuss next year’s settlement, and to ensure that we get the settlements right from then onwards?

[Brandon Lewis]

I can confirm that. I have had a few meetings with my hon. Friend, and he has—rightly—made a powerful case for people in rural areas. I can tell him that I shall be happy to continue to talk to Members from all parts of the country about next year’s settlement.

My hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) raised the position of West Somerset. I have visited West Somerset and met the council leader a number of times. I know my hon. Friend will agree that, given its critical mass—the area has just 35,000 residents—it must consider sharing management and services with other authorities.

There is much more to be said about this subject. I shall be happy to meet Members individually to discuss it with them, but I want to ensure that my hon. Friend the Member for Tiverton and Honiton has a couple of minutes in which to sum up the debate.