Graham Stuart
Main Page: Graham Stuart (Conservative - Beverley and Holderness)Local Government Funding: Rural Areas
Graham Stuart Excerpts(8 years, 10 months ago)
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Graham Stuart (Beverley and Holderness) (Con)
I beg to move,
That this House has considered local government funding for rural areas.
I begin by thanking the Backbench Business Committee for selecting this motion for debate this evening and for rescheduling the debate to a time when more colleagues could attend. I also thank my co-sponsors, the hon. Member for Workington (Sue Hayman) and the right hon. Member for North Norfolk (Norman Lamb). Their support is testament to the fact that this policy area crosses all party divides.
In my 10 years in the House, I have raised local government funding of rural areas on many occasions, but it would be fair to say that progress has been slow. Somehow, those in the countryside are expected to put up with less, whether it is poorer connectivity with broadband or mobile signals, the availability of neighbourhood policing, or affordable and convenient transport links. Indeed, in most aspects of Government expenditure, rural areas get a raw deal.
Sir Greg Knight (East Yorkshire) (Con)
Going back to my hon. Friend’s first point, does he agree that more and more people are accessing local government services via the internet? That should be a boon to rural areas, but it has not been, because broadband in some areas does not exist, while in other rural areas it is patchy, and overall it is rather slow. He and I have worked together locally on this issue. Will he confirm that there is no reason whatever why an area that is geographically isolated should be, or should remain, digitally isolated?
Graham Stuart
My right hon. Friend is quite right. That is not the main focus of today’s debate, but that is the context in which it takes place.
We are here today because the situation I have described is also true in local government, which provides so many of the public services on which our constituents depend. The central facts for the debate are these. Urban residents receive 45% more in central Government grant than their rural counterparts and pay £81 less in council tax per head. One may say, “Well, that’ll be because rural residents are better off. They can afford it. It’s reasonable. Their needs are less”, but the Government’s own average earnings figures show that residents in urban areas enjoy higher earnings than their rural counterparts, whereas those living in areas of significant rurality are the very poorest paid. So how can it be fair for poorer rural residents to pay higher council taxes than their richer urban cousins while receiving fewer services? This central unfairness is why, in 2012, along with Liberal Democrat and Labour colleagues, I set up the Rural Fair Share campaign. For many years, rural councils have been underfunded by central Government because of historic political choices and the formidable lobbying power of metropolitan authorities.
John Redwood (Wokingham) (Con)
My hon. Friend is doing a great job on this issue. Does he know that in West Berkshire and Wokingham—I am one of the area’s MPs—not only was the adult social care settlement so poor that it went to judicial review, but the Government lost, owe us a load of money, yet will still not pay?
Graham Stuart
My right hon. Friend is right. This story can be found in places right across the country, yet this inequity continues year after year. That is why so many colleagues are in their places to talk about it today.
In order to meet the shortfall in grant, of course, rural councils had to respond in the only way they could—and that was, in the past, by increasing their council tax rates. That is why the council tax base is much higher in rural areas, and modest homes in the East Riding of Yorkshire in my constituency can pay higher council tax than is paid on a £1 million property in Westminster. Under the Government’s proposed local government settlement, however, those higher taxes are being used to justify a further shift in support from rural to urban.
Norman Lamb (North Norfolk) (LD)
I appreciate the hon. Gentleman’s efforts in pursuing this matter and securing the debate. Does he share my view that the impact on social care in rural areas is particularly acute? Large travelling distances, combined with the increase in the minimum wage, increase costs further. Does he share my concern that many social care providers are thinking of withdrawing from the market because they cannot make ends meet?
Graham Stuart
My right hon. Friend is right to say that. Not only are residents in rural areas poorer on average than those in urban areas, but it costs more to deliver services there, they have to pay higher council tax and they are also older, with all the costs that go with it—driving social care. Again and again across government and across our society, we hear about the pressures that will result from having to deal with an ageing population, yet it is rural areas that have the eldest population. However, Government Departments show no recognition of the additional costs of age, as reflected in the demographics of rural areas.
Anne Marie Morris (Newton Abbot) (Con)
In my constituency, 25% of the population are over 65, compared with Exeter, a neighbouring urban area, where the figure is only 15%. Many of my constituents are aged over 85, but it is a travesty that many funding provisions do not provide for that very expensive group.
Graham Stuart
My hon. Friend is absolutely right.
Our campaign has argued from the outset that our councils have to bear additional costs because they serve sparsely populated rural areas. Rural councils face higher transportation costs, for instance, when refuse is collected from sparsely populated villages or when children have to be transported into schools—costs that do not have to be faced in an urban setting. As my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) mentioned, as we move increasingly towards the digitisation of services, we find that there are additional costs of ensuring fair access for rural residents who do not have superfast, let alone ultrafast, broadband on which they can rely.
The Government have made a welcome pledge to conduct a new needs assessment preceding the new retention of business rates regime that they are introducing. That is great to hear, but colleagues would be wise to temper their optimism about any changes that might arise. After all, in 2012, the Government carried out a needs assessment and a consultation process. Those involved in the campaign were delighted—hurrah—when proposals were made that recognised the additional costs of delivering services in a sparse area, yet the additional funding that the Government had agreed was necessary was, for the most part, “damped” away. Under the mechanism designed to minimise volatility in funding in local areas, 75% of the gains that the Government had said rural areas should receive were not delivered. This was not damping as in delay, but damping as in totally and utterly removed. That is why our campaign has been calling for the residual amount, which we have calculated to be worth £130 million a year, to be paid in full to rural authorities.
Dr Andrew Murrison (South West Wiltshire) (Con)
My hon. Friend is doing a great job, if I may say so. Does he agree that the rural services delivery grant was a fine innovation by the Government, and does he share my fears that as we move towards 100% of local authority income being levied locally, provisions such as the rural services delivery grant might disappear—to the disadvantage of our rural constituents?
Graham Stuart
My hon. Friend is right to mention the rural services delivery grant, to which I shall return later in my speech.
The complexities of local government finance make it hard for us to get our heads around it. When we hear that there will be business rates retention, we might assume that we are somehow moving into a whole new world, in which taxes raised locally are kept locally, suggesting that we do not need to worry about the residual historical inequities that we are discussing today. But, no, that will not be the case. What is going to happen—it would be useful to hear from the Minister and have him put me right if I am getting it wrong—is that instead of the Government taking all business rates from councils and then giving out grants, they will look at where the business rates are retained and will effectively take the money away from anyone who is getting any more money than the current grant gives to others, while anyone who is getting less will be given more. Although we will have a “new system”, what we will get in effect is—unless the Minister tells us otherwise—precisely the same situation as we started with.
Whenever a Government bring in a new system, they try to minimise volatility, so business rates retention is likely to end up with everyone getting exactly the same money as they get today, which is why it is so important to push for a fair starting place. The danger is that business rates retention will bake in all the old inequities for ever more. There might be the dynamism of being able to retain the growth in business rates, but many of us fear that the ability of rural areas to grow their business rates base and thus make up for any historical inequities is going to be rather less than that of the likes of Westminster to grow its business rates base. I share that with colleagues, and I would be delighted if colleagues have any insights and want to put me right about it.
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
Let me give a practical answer. My area includes Hinkley Point C nuclear power station, and wants to take a view five years into the future on business rates retention. At the moment, however, we cannot do that. We do not know what we are going to get. My hon. Friend is absolutely right about the damping down, because we are not capable at the moment of doing the forward projections in the Sedgemoor area. Does he agree?
Graham Stuart
I do. As the system comes in, there will be equalisation, and because of the different dynamics at work and despite the righteous principle—on this side of the House—in believing people should be incentivised to do the right thing and then keep the money, there will almost inevitably be a revisiting. If it turns out that someone’s huge shopping centre is going to be closed, the idea of them being left with no money is preposterous; similarly, if a huge bounty comes someone’s way, it is pretty likely that the Government will do what Governments have always done and raid it.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
From the perspective of Buckinghamshire, it is no exaggeration to say that this year’s local government settlement is far worse than the worst case and the worst scenario that the county council had calculated. On my hon. Friend’s specific point, beyond 2018-19, when Buckinghamshire loses the revenue support grant, the council has learned that it will effectively lose a significant portion of the business rate top-up grant. In 2018-19, it is set at £1.6 million and in 2019-20, it is £10.95 million. Is this not, in effect, a tax on success?
Graham Stuart
My right hon. Friend makes a strong point.
Returning to my theme of why we should be at least cautiously optimistic about any review promise in future, the Government responded to our campaign in 2014 and promised to conduct research into the additional costs of delivering services in rural areas. They say that they cannot move to recognise it until the evidence is there, and we have long said, “Show me a single service that is cheaper to deliver per head in a sparse rural area than in a concentrated urban one, and we will be delighted to hear it.” I have not heard anything yet. Apparently the current inequities are defensible without any evidence, but any change, even on the most common-sense basis, requires vast amounts of it.
Anyway, the Government conducted the promised research.in 2014. They gathered data from councils at short notice, during the month of August. Strangely, there was a shortage of data, and—unsurprisingly—no real conclusions were reached and no appreciable change was delivered. We were told, “We are sorry, but there is nothing to justify any change.” I therefore caution colleagues not to expect jam tomorrow.
Nick Herbert (Arundel and South Downs) (Con)
Does my hon. Friend agree that the Government deserve real credit for announcing that they will adopt a national funding formula for schools to ensure that their funding will be delivered on an equitable basis in future, although the formula will be phased in? Should we not simply ask for the same arrangement in relation to wider funding? I am not suggesting any kind of gerrymandering of the system. I am merely suggesting the introduction of simple fairness that would recognise equality of need.
Graham Stuart
My hon. Friend is absolutely right. That is why so many colleagues are here tonight—
Graham Stuart
On this side of the House, but, I am pleased to say, in all parts of the House. They are here because they want a system that is fair to all. Conservative Members represent rural areas, but we also represent suburban and urban areas. We do not want a system that is reverse-gerrymandered, an unfair mirror image of the previous system. We want a system that is demonstrably and objectively fair to all, as far as such a system can reasonably be delivered.
Mrs Sheryll Murray (South East Cornwall) (Con)
Does my hon. Friend agree that the absence of representation on the other side of the House shows that this aspect of funding does not seem to affect different parts of the country in different ways? Labour Members representing urban areas do not feel the same concern, because their constituents do not have the same worries.
Graham Stuart
Historically, most of the Labour party’s support has come from the urban heartlands. That may have led it, when in government, always to use concentrated deprivation as an excuse for moving funds to those urban heartlands, at the expense of rural areas. As I said at the outset, it is important to bear in mind that people in rural areas are not part of an idyll. They are not richer; indeed, on average they are poorer.
Mr Owen Paterson (North Shropshire) (Con)
I congratulate my hon. Friend on securing the debate, and on the splendid campaign he has fought on behalf of our rural communities.
May I take up the point made by my hon. Friend the Member for South East Cornwall (Mrs Murray)? Some of us were here throughout the long, long twilight years during which the Labour Government brutally transferred money from rural areas to urban areas. As a result of that, Shropshire will receive £325.67 this year, whereas Westminster, where we are sitting tonight, will receive £715.88. However, the settlement would reduce Westminster’s funding by 13.9% and Shropshire’s by a significant 24%.
As my hon. Friend says, delivering services in rural areas is expensive. Under the last Government we made some improvements, and we should be grateful for that, but the settlement is still extraordinarily unfair. We are exposed as a party. We are now the party of rural England, and we have to put this right. We do not want to ask for a single penny more from the Treasury; we just want a fair settlement within the envelope.
Graham Stuart
I agree with everything that my right hon. Friend has said, except one thing. We are not just the party of rural England. We are the party of the whole United Kingdom, and what we want, what we have pressed for, and what this campaign has always sought on a cross-party basis, is a system that is fair to all.
Victoria Prentis (Banbury) (Con)
I do not represent some rural idyll. I represent two large and growing towns, Banbury and Bicester. I feel particularly strongly about the fact that because of the shortfall in local government funding my council is having to make some very difficult funding decisions that will affect areas of real deprivation. They will affect, for instance, children’s centres and health and wellbeing centres. Does my hon. Friend agree that that is a worry?
Graham Stuart
Absolutely. It is a worry. The distribution of funds becomes more important, not less, during a period of flat or reduced expenditure. It is a bit like when the sea goes out and all the undulations—the inequities—are suddenly exposed. That is what happens during a period of sustained control over public finances, which Conservative Members recognise as being inevitable following the economic wreckage that was left behind by the Labour party.
Dr Sarah Wollaston (Totnes) (Con)
I thank my hon. Friend for his magnificent campaign. Does he agree that we must dispel the myth that there is no deprivation in rural areas, and make it clear that people in those areas are doubly disadvantaged by the lack of access to services such as transport?
Graham Stuart
My hon. Friend is absolutely right. Withernsea, a town in my constituency, is among the 10% most deprived areas in the country, and I know that similar stories can be told about colleagues’ constituencies throughout England. It is not true that there is no deprivation in rural areas. On average, it is not true. On average, the urban resident receives more. Urban areas do not consist of the most deprived, concentrated communities. They contain some communities of that kind, but on average people in urban areas earn a great deal more than those in rural areas.
Sir Oliver Heald (North East Hertfordshire) (Con)
North Hertfordshire District Council is an excellent council which has been making efficiencies for years. Does my hon. Friend agree that expecting it to accept a 57% cut in grant year on year is a very big ask indeed?
Graham Stuart
It is, and where will the pressure fall? It will fall either on services, as it already does, or on the only thing that the council has left, which is council tax.
One of the aspects of this settlement—perhaps the most notable aspect—is the turnaround in the approach to council tax. The rural resident, who is already much more highly taxed, will experience compounded council tax increases. If council tax goes up by 4% in April 2016, and then by 4% a year in 2017, 2018, 2019 and 2020, that will mean five years of compounded 4% increases before the 2020 general election. I suggest to Ministers that they may wish to think long and carefully before presenting that result to the electorate in 2020, while suggesting to rural England that it should support us again.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
It is not necessarily the election in 2020 that we need to worry about, but the county elections in 2017. During the last Parliament, we managed to perform the really good trick of reducing waste in local government while often holding council tax at zero. However, it is not possible to go on making 30% cuts, which is what Gloucestershire will experience this year, and expect to do the same thing. Inevitably, council tax will rise.
Graham Stuart
As I have said, under this year’s provisional settlement, rural councils are being allowed to increase council tax by up to 4%. In order to compensate for the deeper cuts in their central Government grant, many rural councils will be forced to increase council tax by the full amount so that they can provide their statutory services. The impact of that will be that older, poorer residents in rural areas will be faced with an even larger council tax bill, and, more perversely, the gap in the amount of council tax that they and their urban counterparts pay will increase in cash terms.
I am also concerned about the mechanism whereby savings are being made in this year’s provisional settlement. At the end of the last Parliament, flat-rate cuts were applied across the central Government grant that every council received. If the Government were saving 11%, every council’s grant was cut by that amount. We argued strongly that that was not fair, because we needed to close the gap rather than allowing it to stay the same. This year, however, the Government are proposing to apply their broadly flat-rate cuts to the core spending power of local authorities. That sounds very reasonable and, indeed, natural, but it includes Government grant and council tax. As a result, the authorities that are already most reliant on council tax will experience a steeper cut in their Government grant, whereas those that are more reliant on Government grant will experience a smaller cut. Research by the Rural Services Network shows that, while metropolitan authorities will face a cut in Government grant of around 19% during this Parliament, rural authorities will face an average cut of 30% or more.
Tim Loughton (East Worthing and Shoreham) (Con)
My hon. Friend is making an excellent case. May I enter a plea for semi-rural constituencies? Adur, which comprises most of my constituency, is a local government district. In half the areas within the national park we cannot have the development that would attract the new homes bonus, and the population is concentrated on the coastal strip where there are significant areas of deprivation. We are losing revenue support grant at a much higher rate, and it cannot be replaced by the new homes bonus because no land is available for development except on floodplains.
Graham Stuart
My hon. Friend is right. I remember speaking recently to a North Yorkshire councillor who said, “Given that we have a huge park here, we are specifically barred from development and we are rather restricted in our ability to respond to the incentives that have so generously been put in front of us.”
Just as we know all people are created equal and we hold them to be equal under the law, so surely we must insist on equity in the way we impose tax on them and fund the services that support their lives. Beyond imprisonment, taxation represents the supreme expression of the power of the state over the private individual citizen. As Members of this place, we would not accept it if the Government proposed to tax people more and to spend less on them because they were black or white, Christian or Muslim, a man or a woman. There would be uproar. Yet at present we presume to discriminate in this way based on the flimsiest of pretexts—the area in which someone chooses to live, to work and to raise their children.
The rural voice in British politics in some ways resembles our countryside itself. With a few glorious exceptions, ours is not a land of soaring mountains, plunging valleys and jagged peaks. To conjure up rural England is to convey the patchwork beauty of tended fields, the muted chime of church bells or the majesty of ancient woodland, reflecting man’s presence on the land as it has come down to us through innumerable generations. There is a softness and a neatness to our countryside that can be mistaken for cosseted privilege, all ruddy-cheeked squires and roaring fires. Those of us fortunate enough to represent rural areas know that that is not the case and that sleepy villages can be home to people whose lives are characterised by want every bit as intense, or blighted by strokes of ill fortune or ill health just as devastating, as those who dwell in our towns and cities. Yet this local government settlement would tell them once again, as it has done year after year after year, that they must pay more and make do with less.
The rural cause can—must, will—be silent no longer. It is for us in this place to give it a voice. For hon. Friends on my side of the House, I believe that to be especially true. It was rural England that kept the flame of Conservatism alive for a long period—nearly 20 years. Now is the time for those of us who have been loyally returned by rural areas to make good on our contract with our electors. I stand with colleagues to ask, politely but firmly, for fairness, not favours, from Ministers, and to express our unyielding resolution that that should be delivered.
Graham Stuart
The hon. Lady may be a sole voice, but she is making a powerful and important speech, particularly given that it is from the Opposition Benches and grounded as it is in her constituency experience. Does she agree that the inability of rural councils to deliver services more cheaply and more conveniently digitally because the infrastructure is not there, as she has just described, is another reason why a further increase in the gap between urban and rural is untenable?
Sue Hayman
Absolutely. Our difficulty in accessing decent broadband acts as another block on enabling rural businesses to develop and grow. That reduces access to increased business rates, as we have heard.
Simon Hoare
My hon. Friend makes a valid point and he can speak about Coalville with more detailed knowledge than I can. The underlying point is that there seems to be an incorrect assumption that Tory taxes in Tory shires will have to go up in order for Tory business rates in Tory areas to be relocated to other areas. That is a kick in the teeth and I fail to grasp the logic.
Why is the sparsity grant being back-loaded rather than front-loaded? The money is needed now. We are a two-tier county and the figures for Dorset County Council alone show that it loses 43.3%. The planned reduction was 30%, so it is not as if we did not expect some reductions, but 43.3% seems particularly high. I met district council leaders on Friday and they said that they are being led inexorably to the view that Her Majesty’s Government must have a vision for the reorganisation of English local government, but they have not quite worked out what it is yet, and that they are starving them into a form of submission.
Importantly, I welcome the fact that, for the second year running, the Government have delivered the £5 de minimis increase in council tax under the capping regime. If North Dorset takes advantage of that, it will give us an extra £160,000 a year. If we go with 2%, it would give us only £60,000 a year. I invite the Minister to give serious consideration to embedding the de minimis approach in future thinking.
Could we also end the cat and mouse game—it takes place every year—of, “Will they or won’t they cap the town and parish councils”? It is like baiting the lower tiers of local government. Blandford Forum Town Council in particular has made that plea to me. It wants to step into the breach, as evidenced by the 50 grand it is stumping up to help run the local leisure centre. It wants to help fill the vacuum, but at every step and turn it, too, feels constrained, because it does not know from one year to the next whether it will be capped.
North Dorset District Council’s Conservative leader, Deborah Croney, and its chief executive, Matt Prosser, have asked me whether the Minister will consider giving local control over matters such as local planning fees. At present, the council subsidises its planning function with some £600,000 a year, because of the complexity of planning and the very small fees it is able to set.
Graham Stuart
I have a word of warning for my hon. Friend. I would not wish too strongly for the Government to be given licence to put up council tax and fees even more, because our residents already pay substantially more, even though they are poorer and older. The central feature of the proposed settlement is to stick up an already overly high council tax rate by even more, while subsidising urban residents who are richer and pay less.
Simon Hoare
I find myself pained, because I disagree not only with the settlement, but with my hon. Friend. Although he is absolutely right to say that this should not become a new cash cow for local authorities, surely to goodness most planning applications are either for very large-scale schemes—I speak with some authority, having been involved in that area for a number of years, and am pretty certain that such schemes could absorb a proportionate increase—or for domestic planning applications that will add value to the property. If someone is having an extension built, they will pay a fee of £120 and then possibly add £10,000, £20,000 or £30,000 to the value of the property, so there could be a small increase to the fee. If we believe in the narrative of localism, that would help local councils to set their own agenda.
I have been asked whether the settlement and subsequent measures take into account both the increase in the national minimum wage and the living wage, both of which are welcome. Frankly, I do not know the answer to that, so I ask it as an open-ended question. At a time of significant reduction, when costs are going to go up, that will be a difficult situation. I have already said that the costs of delivering services in a rural area are, by definition and de facto, more expensive than they are in urban areas. The impact on adult social care, particularly in a constituency such as North Dorset, which is predominantly, though not exclusively, peopled by the retired, would, I fear, be lamentable. I fear for the future safety and security of many of my residents, many of whom will live in what Douglas Hurd used to describe as slight decayed gentility, afraid to ask for help but certainly needing it. I fear that all of us are likely to face a tsunami of headlines, both local and national, concerning elderly vulnerable people who have been caught in this unappetising pincer movement of a reduction in income and being left in their own homes and to their own devices.
Kevin Hollinrake (Thirsk and Malton) (Con)
It is a pleasure to follow the beautifully presented case made by my hon. Friend the Member for South East Cornwall (Mrs Murray).
I am a former businessman, and fairness was a guiding principle of my business career. I think it will be the most commonly used word in this evening’s debate. Like many of my colleagues, I stood on a platform of getting a fairer deal for our rural areas. They do not get a fair deal today.
The provisional settlement is the opposite of fair. In effect, there will be a 37% reduction in North Yorkshire County Council’s budget, versus an average reduction for metropolitan areas of 19%. Compared with what would happen under a flat-rate reduction, counties across the UK will be £161 million worse off in cash terms in 2016-17, while metropolitan authorities will be £73 million better off. That is a massive redistribution. In effect, council tax increases in my constituency and others like mine will be supporting London and metropolitan areas.
North Yorkshire County Council is one of the biggest losers, on the back of what is already a bad deal. A band D taxpayer in North Yorkshire pays about £1,430 a year, whereas one in Westminster pays £670 a year. Nationally, as my hon. Friend the Member for Beverley and Holderness (Graham Stuart) pointed out, people in rural areas pay about £81 a year more in council tax, but get about £130 less in their settlement funding allocation. We pay more, we earn less and we get fewer services.
Services are harder to deliver in rural areas. We have many bus passes in Thirsk and Malton, but very few buses because it is so difficult to provide buses on a commercial basis and it is getting more challenging to do so. All we are asking for is a fair deal. We welcomed the increase in the rural services delivery grant to £65 million a year, but that is back-loaded. Effectively, in 2016-17 it will deliver only about £4.5 million. The gap is widening, not narrowing. That is happening on the back of other areas where we do not get a fair deal, be it healthcare or schools, although huge progress has been made in this Parliament to remedy that situation.
Graham Stuart
My hon. Friend is right to highlight the Government’s promise to bring in fair school funding. We all welcome that. However, in the last Parliament, when reductions were made in local government funding, they were uniform. If the Government saved 11%, everybody’s grant was cut by 11%. That did not close the gap, but there was the development of the rural services delivery grant. In this Parliament, the proposal is that metropolitan areas will see their local government grant reduced by less than 20%, but in his area it will be reduced by 30%-plus. Does he agree that that is not acceptable, as it will make an already invidious situation even worse?
Kevin Hollinrake
I absolutely agree. I hope that this campaign will be as successful as my hon. Friend’s campaign for fair funding for rural schools.
This debate is not about the size of the cake. Local authorities need to share the burden of balancing the books. Governments of both colours have run deficits for 28 of the past 34 years. We are still running a deficit this year of about £75 billion. We need to make cuts. The challenges ahead will be about increasing social security budgets. Sixty years ago, social security accounted for 11% of spending. It now accounts for 28%. Health spending has gone from 7% of spending to 18%. Those issues are particularly profound in rural areas. We know that we need to make cuts. There is no alternative that will balance the books.
This debate is not about the size of the cake, but about how the cake is divided. North Yorkshire expected a flat-rate cut, which would have meant a 27% reduction. That is a challenging reduction. In the words of our chief executive, it would be “tough but understandable”. The proposed 37% reduction, which amounts to £23.7 million, is £6.9 million worse than a flat-rate reduction. The social care precept on the council tax will raise only £4.8 million, so we will be £2 million worse off, and that money is supposed to help our adult social care—another very profound issue in my constituency, which has seen huge increases in the elderly population. There will be a 20% increase in the number of over-65s and a 50% increase in the number of over-95s in the next five years.
We need to make sure that we get a fair deal. Of course, local authorities need to play their part in that. They need to develop greater synergies and more efficiencies. In the local authority area of North Yorkshire County Council, there are nine local authorities. I do not know how sustainable that number is in the longer term. I fully support reorganisation. At a time when we are losing services, local government must be more efficient.
One could say that local authorities should use their reserves, but many of those reserves are committed, particularly to flooding schemes, for which we have seen an increased need in my area over the past few weeks, and to supporting the roll-out of broadband, improving our roads and filling in potholes. There is a feeling among my constituents that we are not getting a fair deal, so I call on Ministers to revise the proposal to ensure that there is fairness for people in both urban and rural areas.
Peter Heaton-Jones
My hon. Friend makes a strong point on behalf of his area which, as he says, is mirrored in North Devon.
In 2016-17 some specific grants were included in the funding base for Devon County Council, and if those are excluded to give a more accurate like-for-like comparison, the reduction in grant for that council is 17.4%, compared with an average of 16.6% for the shire counties. Not only do we as a rural area do worse in comparison with urban areas, we are even doing worse in comparison with other rural areas. That seems something of a double whammy for Devon.
At the other end of the local government spectrum, let me echo a point that was ably made by my hon. Friend the Member for North Dorset—he has just retaken his place. He noted how one of his town or parish councils had complained how difficult it was to plan ahead because of the annual “will they or won’t they?” capping saga, and exactly the same point was made to me by Barnstaple Town Council, which has the same horror to face every year. That is stopping it planning ahead and adequately providing the services that it needs to provide, and I urge the Minister to consider that.
There are some beneficial aspects to the settlement. I accept that the rural urban funding gap is gradually closing, and the longer, four-year settlement period is welcome as it will help local authorities considerably with their forward planning. We will not have that worried look at the Advent calendar every December to wonder when the settlement will come and what it will be, and I welcome those two points.
Graham Stuart
I hate to interrupt my hon. Friend as he moves to his peroration, but I do not believe that there will be any closing of the gap. The proposal is precisely for lower reductions in the central Government grant for metropolitan areas than for rural areas and, even with the increase in the rural services delivery grant, we will see a widening, not a closing, of an already iniquitous gap.
Peter Heaton-Jones
I am sure the Minister will clarify that. I was coming on to say in my concluding remarks that although those two elements appear to be welcome, they are not enough. I say that quite plainly to the Minister.
I am disappointed overall. I believe there is more we can do as a Government to assist areas such as North Devon. That is why I have written to the Secretary of State. I have in my hand a piece of paper: a letter I have written to the Secretary of State. It is designed to be helpful and to suggest ways in which we could, as a Government, help areas such as Devon, in particular North Devon. I hope we can achieve a fairer settlement for these areas. I look forward to working with the Minister, his colleagues and other colleagues in areas similar to mine to help to make that happen. I say this gently but firmly to the Minister, and, I have to say, with some regret: at the moment, the Government have got this wrong. We have time to put it right and I appeal to the Minister that we do so, for the sake of North Devon and other rural areas.
Mr Steve Reed (Croydon North) (Lab)
I congratulate the hon. Member for Beverley and Holderness (Graham Stuart) on securing this important debate through the Backbench Business Committee. It is a critical topic. I look forward to hearing the Minister’s responses to the many excellent points that have been made across the House.
I represent Croydon North, which is perhaps not the most rural constituency, but at heart the debate is about fairness, and that is a matter that concerns us all, wherever we represent in the UK. The most unfair aspect of the Government’s spending review is how they have targeted the biggest cuts on the poorest areas. They have placed the greatest burden on those least able to bear it. Our rural communities are among those that have been the hardest hit.
There are real issues of poverty in rural areas. We have heard Members talking eloquently about those issues during the debate. Households in rural areas are more likely to be in fuel poverty than those in urban areas. People living in rural communities find it harder to access key services such as schools, hospitals and shops. As my hon. Friend the Member for Workington (Sue Hayman) said, often that is because of poor, limited public transport. Housing costs are spiralling out of many people’s reach, yet despite all that the Government’s latest spending plans do little to address the growing pressures on rural communities.
Social care has been referred to in the debate. It is a particular problem. The proportion of older people is higher in rural areas than in urban areas; I was impressed by the comments by the hon. Member for Thirsk and Malton (Kevin Hollinrake) in that respect. That means these communities will be hit the hardest by the £1 billion funding gap in social care that the Local Government Association, which is Tory led, estimates still remains. That is assuming that every council in the country levies the Chancellor’s 2% council tax precept, and that is not a foregone conclusion.
Families in rural areas spend almost £800 more than the national average on transport. Under the Conservatives, rail fares have gone up by almost 25%, yet complaints about train services are rising in all parts of the country. Services in rural areas are often unreliable, where they exist at all, and rolling stock is often out of date.
Fares have gone up by 27% since the Prime Minister first entered Downing Street, yet fewer than half of all small rural settlements have a regular bus service. Rural communities should be able and should have the power to regulate their own bus services, as London can, helping to ensure that the right services are available at the right fare.
Low pay is endemic in many rural communities. The gap between urban and rural wages has grown by £1,000 since 2010, yet the Government have abolished the Agricultural Wages Board. Research shows that, after London and Oxford, starter homes are least affordable in rural areas. Housing costs are soaring while the Government have allowed rural wages to decline. Now, to make things worse, the Government are forcing councils to sell off what little affordable social housing remains.
Cuts in funding have had detrimental effects on all sorts of services. We have seen youth services close in rural communities. Communities have been plunged into darkness when councils have been forced to switch off street lighting during the night. Neighbourhood policing has been decimated to such an extent that Her Majesty’s inspectorate of constabulary has reported that car crime has been all but decriminalised, and cuts in vocational training and further education mean that people are unable to develop the skills they need for taking up employment opportunities in rural communities.
Graham Stuart
The hon. Gentleman is making a powerful speech; it is incorrect in only one way. Earnings have not dropped in rural areas; they simply have not grown as fast as they have in urban areas, such has been the economic success of this Government. The case he is making illustrates the need to close the gap between urban and rural areas, whatever the Treasury sets as the overall budget. Is it now the Labour party’s official policy to reduce and close the gap in spending power between rural and urban areas?
Mr Reed
The hon. Gentleman is right to say that there is a decline in wages relative to the cost of living in those areas. The Labour party is looking for fair funding across the Government, and I will say more about that later if he will allow me.
Pulling all that together, we are seeing a toxic cocktail of rising fares for worsening public transport, inaccessible public services, demand for services rising faster than funding, fewer good job opportunities, falling wages and soaring housing costs. People are being priced out of living and working in rural areas.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to respond to this important debate, and I start by congratulating my hon. Friend the Member for Beverley and Holderness (Graham Stuart) and other Members on securing it. I pay tribute to their valuable contributions and, in particular, to the great passion that my hon. Friend and colleagues have shown for our rural areas. I would like also to take this opportunity to recognise the hard work and dedication of rural authorities across the country over the past five years and their contribution to improving local services in challenging times. It is local knowledge, experience and capability that will help to overcome the challenges faced by rural communities, to improve local services and to grow rural economies. We are committed to supporting rural areas in fulfilling that role.
We recognise that rural communities face particular issues, and that some rural councils with low council tax bases face particular pressures. That is why we are determined to continue tackling the deficit to secure the country’s economic future, while also providing help and support to rural authorities. We want rural areas to contribute to and benefit from economic growth. The rural economy is worth £210 billion. Our rural development programme for England has invested more than £400 million in projects to support the rural economy, and we are investing a further £3.5 billion by 2020. We are also investing £780 million for areas that commercial broadband coverage will not reach. To support areas further, we will grow the local growth fund to £12 billion by 2021.
In December, the Secretary of State announced an historic four-year settlement for local government, on which we are consulting until the end of this week. Our proposal is designed as a sustainable pathway to transform over-centralised Britain into one of the most decentralised countries in the world. By 2020, local government will be entirely funded by its own resources—council tax, business rates, and fees and charges—which was never thought possible until very recently.
Since the beginning of this Parliament, we have been honest about the fact that this change must be fiscally neutral, and that we would phase out Government grants and give councils new responsibilities. We are currently consulting on the settlement, and all councils, including those from rural areas, and Members of this House are welcome to respond. Indeed, we can take many comments made by Members this evening as representations to that consultation. I have also already met a large number of local councils, as well as the Rural Services Network today, as part of that consultation. We had a very constructive discussion and I encouraged them—as I have encouraged all local authorities—to set out in full their detailed observations and suggestions in relation to the consultation.
We want to be candid about our proposal. It does require continued savings from local government in order to meet our deficit target, which should not come as much of a surprise to anyone. The unanimous view across local government is that the biggest cost pressure is on adult social care, which a number of Members have mentioned. Our introduction of the 2% social care precept flexibilities for adult social care and the additional £1.5 billion of extra funding for the better care fund, which will all go to local government, will help to address that, but we do not underestimate the challenges ahead. That is why we argued for the possibility of a four-year budget deal, so that authorities that are affected can look at ways in which they can smooth the path over the four years and use reserves, if they feel that that is appropriate and can be justified to the local authority. However, we also want to make it absolutely clear that, despite invitations to do so, we have made no assumptions in our published figures that councils will use their reserves, whereas the Office for Budget Responsibility assumes that councils will continue to add to their reserves during the spending review period.
Graham Stuart
Many rural residents will ask why it is that, given the need to make savings, the reductions in central Government spending power are disproportionately reducing more in rural areas than in urban areas. By 2019-20, Government-funded spending power in the East Riding of Yorkshire will be £214 per head, while in Kingston upon Hull it will be £468—a 14% reduction in Hull and a 28% reduction in the East Riding of Yorkshire. How is that right or fair?
Mr Jones
My hon. Friend has made that point a number of times. It is a significant contribution to the current consultation. I will come on to that point, but the package that we have put forward for local government will continue, notwithstanding his comments, to see a narrowing of the gap between the core spending power for rural and urban authorities.
Graham Stuart
This debate has been a breath of fresh air throughout which there have been tremendous contributions from Members across the House. I am delighted that thanks to the Backbench Business Committee we were able to have this discussion.
Throughout his career, the Minister has been thoughtful, listening and insightful—[Interruption] And eloquent—I thank the Whip, my hon. Friend the Member for Skipton and Ripon (Julian Smith). Prompted by him, I am sure that more kind blandishments can be sent the Minister’s way. I am grateful for the Minister’s response and for the fact that he and the Secretary of State have listened to us.
The Minister said that he would treat this debate as part of the consultation, which closes this Friday. I have two asks on that. First, he should speak to his ministerial predecessor, who is sitting next to him—my hon. Friend the Member for Great Yarmouth (Brandon Lewis). When he was Minister, we were not very happy that there was an equal imposition of reductions in central Government funding to every council when there was such a discrepancy between rural and urban areas. We wanted that gap reduced, and he said, “These are tough times and we have inherited a deficit—I’ve got to do something that’s manageable and realistic.” So there was an equal cut in local government grant—11% was being saved and it was done uniformly to everybody. Unfortunately, that will go out of the window in this year’s proposed settlement. Metropolitan areas will see a 19% reduction in central Government funding over this Parliament, yet rural areas will see a 30%-plus reduction.
That cannot be right, for all the reasons set out brilliantly, it has to be said, by Labour Members—not only the hon. Member for Workington (Sue Hayman) but the shadow Minister, who, I am delighted to say, recognised that rural areas are facing the greatest hit. Anyone who wants to can look at Hansard tomorrow and see the Labour spokesman saying that. It is a shame that he did not go further and say that he wants the gap to be closed. Then again, given the Corbynite north London elite who are gathering behind him, it is not surprising—[Interruption.]
Mr Speaker
Order. I think that the hon. Gentleman has inadvertently provoked what seems to be a voluntary identity parade, for which there is no requirement at this late hour.
Graham Stuart
I apologise, Mr Speaker. Anyone who introduces more schizophrenia to the Labour party deserves to be told off by you and others. It is a shame that the logic of the argument so brilliantly espoused by the shadow Minister did not lead to a Labour commitment to do the right thing and close the gap.
My first ask is that, if we are going to make savings—and we Conservative Members say that we do—let us do it equally everywhere, so that there is no discrepancy between urban and rural when there is already a big gap between the two. As we have established, people in country areas are older, poorer, pay higher council tax and receive fewer services. It has to be right to close the gap, and the way to do that is by delivering, in this Parliament, an increase of £130 million, not £65 million, in the rural services delivery grant.
I think I speak on behalf of Conservative colleagues when I say that, if there is equal pain for everybody and an increase of £130 million in the rural services delivery grant in this Parliament, we would be happy. Our council leaders would still have enormously tough jobs to do, but they would feel that we were all sharing the burden fairly. If the Minister can go to the Secretary of State and deliver that, he will be not only applauded by Conservative Members, but, perhaps more materially to him and his colleagues, supported in the Lobby when we vote on the issue next month.
Question put and agreed to.
Resolved,
That this House has considered local government funding for rural areas.