Graham Stuart
Main Page: Graham Stuart (Conservative - Beverley and Holderness)(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Brandon Lewis
I think the hon. Gentleman will find that that is why those areas have substantially higher spending power in the first place. He should also note that a member of his own Front-Bench team supported the petition for a fairer spread between urban and rural areas a couple of months ago.
Mr Graham Stuart (Beverley and Holderness) (Con)
Urban areas receive 50% more in central Government grant than rural areas which, contrary to what some Opposition Members suggest, have lower average incomes, so poorer people are paying higher taxes and getting fewer services. That cannot be sustained.
Brandon Lewis
My hon. Friend has made that point about rural areas with great passion on a number of occasions, and I will deal with it in a moment.
After years of doffing their caps to central Government and talking down their areas to scrape together more handouts, councils can now embrace the autonomy that this settlement gives them. Councils have risen to the challenge of delivering more for less, but local government spending still accounts for a quarter of all public spending. In the current year, it will spend £117 billion, which is £3 billion more than last year. That makes the local government bill bigger than that of the NHS and double the defence budget. It is therefore necessary for councils to continue to find sensible savings.
Andy Sawford
I will make progress on this point, and then I will take further interventions.
Will the Government tell the House what meaningful consultation there has been, and who gave them permission to remove a principle that has stood for 65 years—that councils should be funded according to need? The House of Commons Library states:
“Prior to 2013/14 local authorities received formula grant at the Local Government Finance Settlement. The formula used was based on a four block model which included its relative need. In the first year of the Business Rate Retention Scheme this link remained in the funding baselines, but the relationship between funding and need exists now only to the extent that they are present in the original baselines.”
As each year goes by, there will be further erosion of the relationship between funding and need. The Library clearly states that
“reductions are generally larger for more deprived areas and smaller amongst less deprived areas.”
Mr Graham Stuart
I am grateful to the shadow Minister for giving way; he is being most generous. I notice that he did not respond to the question from my hon. Friend the Member for Birmingham, Yardley (John Hemming) about where Labour would make cuts. On the issue of need, density was given four times the weighting of sparsity, even though there is no link between density of population and increased cost and delivery of services. How was that fair?
Andy Sawford
If the hon. Gentleman will be patient for a moment, I will, of course, come on to what Labour will do if it forms the next Government. On sparsity, I took part in the debate that he and others led last year, which I thought was excellent. I recognise many of the issues that he raised and there is a sparse rural authority in my constituency in East Northamptonshire. The formula should of course take account of rural sparsity, as well as urban deprivation. There is always a debate to be had about fairness within the system, but what is critical is that the part of local authority funding with fairness at its heart—notwithstanding the debate that will be had—is now being eroded, so the opportunity to ensure that funding is fair and according to need is being lost.
Mr Geoffrey Cox (Torridge and West Devon) (Con)
I wish I could say it was a pleasure to follow that speech.
The shadow Minister could have come to the House, in a statesmanlike way, and acknowledged that there was a serious crisis in the public finances that the previous Government made a considerable contribution to creating; that the Government faced a difficult task; that the four-block formula was widely discredited; that for 13 years under Labour council tax spiralled in areas such as mine, more than doubling and creating hardship for those on low wages and the elderly; and that for 13 years MPs for rural areas tried to persuade Ministers that the four-block formula did not capture need properly. Like most people, he knows it does not capture need or deal with the heterogeneous nature of rural deprivation, but rather discriminates against rural poverty and is fundamentally flawed. Instead, all we heard was that the system he would employ would be fairer—well, without the detail, nobody will believe that.
Torridge has the lowest wages in the country—lower than Liverpool, lower than Manchester, lower than the cities for which the shadow Minister was speaking, lower than other Labour-represented areas—the lowest average household incomes in Devon, the lowest income in Devon, the lowest output per capita in the south-west and the highest unemployment in the south-west. There are really deprived areas in these rural areas. For 13 years, Members on this side of the House, as well as some on his side, endeavoured to persuade the Labour Government that this formula was morally bankrupt, but all he can do is pick out and criticise specific aspects of how the Government have dealt with local government funding.
The problem is that the whole formula is wrong. I want to concentrate on certain difficulties that he acknowledged—although he did not say what he would do about them—concerning the highly discriminating way the system treats rural areas. Council tax has spiralled in rural areas: it is £86 per head higher than the average, yet they get £145 per head less in grant funding. Those of us who represent these areas, including, I believe, those on the Opposition Benches, feel that that is an inequity. What would he do about that? We have got to do something about it.
I have to say with regret to my hon. Friend the Minister that this Government are not doing enough about it. It is not enough to say that £11 million, with the extra £2 million that he has found today down the back of the sofa, corrects the anomaly that small rural district councils and shire county councils are facing. West Devon has had to take out the best part of 14% of its budget over the last three years. In Torridge, there are similar problems.
One point that the hon. Member for Corby (Andy Sawford) made with which I did agree was that this Government and any future Government that the Labour party may one day in the distant future form will have to decide whether they want small rural district and borough councils, because many of them—certainly some in the south-west—are on the brink of viability. I agree with the hon. Gentleman on that. It may be that we have to look hard at the whole question of the reorganisation of local government in those areas and at whether we can maintain them.
I urge my hon. Friend the Minister to look again at the issue of rural sparsity and fairness to rural areas. The issue seems to be widely acknowledged and what has been done so far is not sufficient. One of the most frustrating factors that those of us on the Government Benches have experienced in meeting the Secretary of State—he has been very good with his time, as has my hon. Friend the Minister—is that every time we present a case, we are told that the figures are not what we say they are. Yet there seems to be no agreed common ground as to what those figures are so that we can both talk on the same level and on the same playing field. I urge my hon. Friend to sit down with the campaign that is growing in momentum and force on this side of the House—I hope that he acknowledges that—and see whether we can agree common terminology and common ground as to what these figures mean, so that we can achieve fairness in the future. I respectfully suggest to the Government that that is something to which they need to attribute the greatest priority because there is a growing sense of frustration on the Government Benches which will not for much longer be capped, if I can put it that way. I hope that, in closing, my hon. Friend the Minister will be able to help us with that.
I want to deal very briefly with the position of Devonshire county council, which is facing a huge problem following the recent severe weather. The new changes to the Bellwin formula are welcome but I understand that the formula does not deal with repair and maintenance. The Devonshire county council has £750 million—
Mr Graham Stuart
The East Riding was devastated by floods in 2007 and I am very interested to hear further observations from my hon. and learned Friend.
Mr Cox
My hon. Friend’s intervention enables me to say that the problem with the Bellwin formula is that it does not cover repair and is for a limited period. Repairs in the south-west, and particularly in Devon, are now up to a backlog of £750 million. I urge my hon. Friend the Minister to look again at the Bellwin formula to consider whether it properly takes account of the costs that large rural shires are facing after this hugely problematic and severe weather.
Mr Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to follow the right hon. Member for Salford and Eccles (Hazel Blears). She made an interesting speech, as one would expect. Many hon. Members’ speeches have been powerful, not least in suggesting the weakness of the system that guides local government funding.
There is a consensus of disappointment—albeit unspoken on Labour Benches—about the speech made on behalf of Her Majesty’s Opposition by the hon. Member for Corby (Andy Sawford). It entirely lacked any alternative narrative or suggestion, other than a platitude about the system being fairer and needing to be looked at in future, to give us an idea of what the Labour party would do. The right hon. Member for Salford and Eccles was a Minister in the previous Government, and the right hon. Member for Leeds Central (Hilary Benn) was a senior figure in that Government. After all, the previous Government led us into this calamitous financial state, meaning that today’s Ministers have to make tough and difficult choices. Her Majesty’s Opposition’s total failure to recognise responsibility for the mess that the Government inherited, or to provide any insight into the tough decisions or choices they would make if they were ever allowed back into government by the British people, was disappointing. The House deserved better, and I expected more of the hon. Member for Corby, of whom I am actually an admirer.
I am a founder of Rural Fair Share, a cross-party campaign group of MPs from both sides of the House, and I am chair of the all-party group on rural services, so I make no apology for speaking from a rural perspective. Powerful speeches have been given by my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), the hon. Member for North Devon (Sir Nick Harvey) and my hon. Friend the Member for Newton Abbot (Anne Marie Morris). There was a very Devonian quality to much of their speeches. They spoke effectively for Devon, but also for rural areas right across this country, not least the East Riding of Yorkshire.
As has been said—I make no apology for saying this again—people in rural areas earn less than those in urban ones. The idea that people in rural areas are somehow all prosperous and wealthy compared with the massively deprived populations of urban areas is false. In truth, people on lower incomes are paying £86 more per head in council tax. That came about under the system instituted by Labour Members who talk about the cost of living crisis. It sometimes feels as though they do so with crocodile tears. They put in place a system in which poorer people pay higher levels of council tax, while their councils receive £145 less per head in central Government grant than those in urban areas, and the cost of delivering services in rural areas is higher, as my right hon. and hon. Friends have said. Look at a map: where does it cost more to empty the bins—in the city or in the vast rural area around it? It is obvious that there are cost pressures.
Grahame M. Morris
The hon. Gentleman is selling a misconception to the House. Where are services more expensive? Let us look at the numbers for looked-after children, which, as he well knows as chair of the Education Committee, cost £40,000 to £50,000. In my area of Newcastle, there are 101 looked-after children per 10,000 of the population; in Wokingham, there are 24 per 10,000. That is an example of where costs are much higher.
Mr Stuart
It is fair to point out that Wokingham is not representative of all rural areas in this country. It is a rather unhelpful comparison. However, the hon. Gentleman is right to say that urban areas involve costs, and concentrated areas of deprivation have costs. No Government Members are suggesting complete equalisation, but to have an area with more low-income people paying higher levels of tax for fewer services is not sustainable.
I know that, in his heart of hearts, the hon. Gentleman was disappointed by the speech of the hon. Member for Corby, who simply failed to explain how Labour would wrestle with the issues. The Minister is wrestling with those issues. [Interruption.] The hon. Gentleman is trying to heckle me. What we heard from him was a defence of a system that is indefensible. [Interruption.] It is indefensible to suggest that the system was based on need and that consensus had somehow been smashed. The truth is that the previous Labour Government refused to listen to voices from all parts of the House representing the rural interest. In fact, they allocated four times the weighting to population density—not deprivation, but density—than to sparsity. That was unjustifiable, but, sadly, it continues to be a fundamental part of the system today.
I, too, am pleased that there has been a minuscule increase today in the diminutive grant to rural areas from £9.5 million to £11.5 million. However, even the larger figure would not stretch to a grab bag of crisps for each resident who lives in a rural area, although that might depend on how competitive one’s local grocer is. My hon. Friend the Member for North Devon laid out just how many decades it would take to equalise the figures. Those of us who speak on behalf of rural areas simply say to the Government that we must take more action to narrow the gap. We think that the 50% rural penalty—50% more funding goes to urban areas—should be reduced to no more than 40% within five years.
We have asked for more evidence. The Government have undertaken to carry out research on the cost of rural services. I fear, as do many of my hon. Friends, that the research will look just at rural services. It must compare the costs of services across urban and rural areas. It would then be able to pick up on the point made by the hon. Member for Easington (Grahame M. Morris) about the number of children who are in care and the cost pressures that arise from that.
Not only must the funding system be dynamic and reward successful councils that promote housing and business, but it must have a baseline that genuinely reflects need. The system that Ministers are wrestling with today was inherited from the Labour party. It is not fair and it does not properly reflect need. The fact that rural communities have been penalised so much for so long just goes to show how morally bankrupt are the arguments that we have heard from the Labour party.
Stephen Gilbert
I am grateful to my hon. Friend. She makes the point that I started with: this is a very divisive debate, pitting colleagues within parties on all sides of the House against each other. It pits towns against the countryside and city councils against district councils. That speaks to the fundamental need for overall reform and cross-party consensus on how we deliver local government funding in a way that meets needs on the ground and is equitable across the country, because it ain’t doing that at the moment. I have joined a number of colleagues on the Government Benches in presenting arguments to the Government to the effect that the rural-urban divide needs to be eradicated over time.
Mr Graham Stuart
Further to the intervention from my hon. Friend the Member for Truro and Falmouth (Sarah Newton), if it is the case that Members of the hon. Gentleman’s party are standing in the way of a fairer settlement for rural areas, it may be worth having a quiet word. I would certainly urge him to do so, if that is the blockage.
Stephen Gilbert
There is no suggestion that any one of my colleagues, as opposed to any one of my hon. Friend’s colleagues on his side of the coalition, is standing in the way of tackling this funding formula. Of course, one of his colleagues is the Secretary of State. I think both the hon. Gentleman and I know that the funding formula bequeathed to us by the Labour party is one that really put in place the disparity between rural and urban areas, and one that he and I and all our colleagues on the Government Benches are asking our right hon. Friends in the Treasury and in the Department for Communities and Local Government to address.
I have joined colleagues on this side of the House in presenting the case for a fairer funding formula for Cornwall to Government. I am disappointed, to say the least, that that case has not been heard today. On that basis, it would be wrong for me to support what I think is an inadequate settlement tonight, and I shall continue to work with colleagues from all parts of the House to try to find consensus on how we deliver local government funding that is fit for purpose.
Stephen Williams
Many Members have contrasted the spending power of cities with that of southern authorities. However, it is absolutely clear that the spending power of authorities such as Newcastle is far in excess of that of many other authorities with similar responsibilities but entirely different demographics. It is completely wrong to say that unfairness is built into the system, given that the top 10% of the most deprived authorities in the country are the authorities with the most power to spend on their citizens.
As has been acknowledged during the debate, we are moving to an entirely new system of local government finance. I accept that there is more to be done and that there is a need for reform in the system, but I am sure that that reform will come when the economy has fully recovered.
Reference has been made to the amounts that are raised through council tax, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), was criticised for his “language of begging bowl”. As someone who, when I was a council opposition leader in Bristol, went on deputations to local government Ministers in both the other parties, let me put it this way: local government had a supplicant relationship with central Government, and that is what this Government are trying to change. We are putting more incentives in the system for local authorities to build more houses. The business rates retention will encourage local economic growth: for the first time, local authorities will retain more of the benefit from economic growth in their own areas rather than handing 100% of it to the people in the Treasury, so that they can decide how much should be distributed around the country according to their own formulas and principles.
Another of the new incentives is the new homes bonus. I am sure that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), will be pleased that his authority in Bradford is to receive £2 million in new homes bonus. Leeds will receive £3 million in new homes bonus, and my city of Bristol will receive £2.2 million.
The other major criticism that we have heard today is that some parts of the country have lost out at the expense of others, either as a result of this settlement or over a long period. However, the settlement represents a fair deal for every part of the country—north and south, district and county, city and shire. As I said a few moments ago to the Chairman of the Select Committee, councils have an average spending power of £2,089 per household, and the average spending power reduction will be just 2.9% in the forthcoming year. Moreover, protection is built into the system for the most deprived areas of the country, which are the most dependent on grant.
We have also recognised that services are sometimes more difficult and expensive to deliver in rural areas. Many Members, particularly those on the Government Benches, recognised the real difficulty that rural authorities experience in delivering services to their constituents. I certainly recognise that poverty is found in all parts of the country. It is not necessarily concentrated only in city-centre constituencies such as mine; it is found in Barnstaple, in St Austell, and in many other rural and sparsely populated parts of the country. That is why we have already set aside £9.5 million—£1 million more than last year—to help the authorities in the most sparsely populated rural areas.
I thank my hon. Friend the Member for North Devon (Sir Nick Harvey)—there were many Devonian speakers in the debate—for saying that we ought to go a little further. In fact, today we have announced a significant amount of extra money: £2 million. That means an extra £44,000 for North Devon district council. My hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) said that the average per authority was £30,000, but Cornwall’s unitary authority will have just over half a million pounds extra.
Local authorities need to protect taxpayers by keeping their council tax down. For many of our constituents, the council tax bill represents a huge part of their monthly outgoings. In many cases, it is much more significant than other utility bills, so to denigrate the Government’s policy of encouraging local authorities to freeze council tax is to miss a major point of what the Opposition call the cost of living crisis. If they do not recognise that council tax is part of the cost of living pressure that all our constituents face, they are living in another world.
It is no surprise to find that Labour Members live in another world. Under the previous Government, council tax more than doubled, pushing a typical bill up to £120 a month for hard-working people and pensioners. This Government, however, have done everything possible to protect families from further increases. Over the past three years, council tax bills have been cut by 10% in real terms across England, and we are encouraging local authorities to continue to freeze their council tax. We will further incentivise them to do that not only by offering them a grant but by putting that grant into the baseline so that they can have certainty for future years.
Already, 137 local authorities have confirmed that they intend to reduce or freeze their council tax bills, including—as my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) pointed out—almost all the Liberal Democrat local authorities. They include the local authorities led by directly elected mayors in Watford and Bedford, and the Liberal Democrats in my own city of Bristol want our city’s mayor to follow their example.
The referendum principle has been mentioned by many speakers today. The hon. Member for Sheffield South East criticised the Government for taking time to announce what the referendum threshold should be. We confirmed on 5 February that it will remain at 2%, which was the assumption that the local authorities were working on when planning their budgets. The hon. Gentleman was around during the last Parliament, and I must gently remind him that the previous Government frequently capped local authority council tax increases without announcing the cap until March, after the local authorities had set their budgets and started to prepare the bills to pop through people’s letter boxes. We have certainly improved on that situation.
There are many things that local authorities can do to balance their books in an efficient way. The Government are encouraging such efficiencies, and there is still plenty of scope. For instance, the Liberal Democrat council in Kingston-upon-Thames is investing in a combined heat and power system that will benefit its council buildings and private sector buildings, saving money and carbon at the same time. Cambridge council is protecting and enhancing local shops, which is good for local residents, good for tourists and good for local economic growth. The process is now being incentivised by the retention of business rates.
Mr Graham Stuart
Further to the speech that my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) made earlier, will the Minister confirm or deny that the Liberal Democrats stood in the way of a fairer deal for rural areas?
Stephen Williams
I am not privy to every conversation that takes place, as my hon. Friend knows. I can assure him, however, that possibly the most powerful person in the Government with his hands on the purse strings from our side of the coalition, the Chief Secretary to the Treasury, is most certainly a friend of rural areas. He has pushed for the freeze in fuel duty, which is another example of the Government listening to the cries for help from rural communities. There is a danger, in these debates, that we see matters purely in the context of the silo of our own Department. I agree entirely with the right hon. Member for Salford and Eccles (Hazel Blears)—the former Secretary of State for this Department—that it is a mistake for Governments to do that, and we have not done it. Across the piece, we are doing our bit to help rural areas, including through freezing fuel duty. Had Labour’s plans been put into effect, rural motoring would have cost much more.
There is more that local government can do to hold down costs. An example can be seen in the tri-borough initiative in west London, involving Hammersmith and Fulham, Kensington and Chelsea, and Westminster councils. The leader of Kensington and Chelsea council told me recently that the initiative was on track to save £40 million by combining back office and management services.
In conclusion, this coalition Government are all about building a stronger economy and a fairer society in order to help people to get on in life by giving them more power to decide what happens in their community and supporting their local area in ways that will allow their community to thrive and prosper. There is no doubt that some difficult decisions have had to be made about public finances, and councils cannot be exempted from that process. But councils have taken important steps towards modernising and transforming their services, and I certainly pay tribute, on behalf of all of my colleagues, to the efforts that many councils have made to live within their difficult budgets. I also think we must all acknowledge that more could be done to reduce the costs of delivering their services while keeping council tax down, and I have every confidence that they will rise to the challenge.