Funding for Local Authorities

Debate between Ian Mearns and Neil Parish

Thursday 10th October 2013 Commons Chamber

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

I beg to move,

That this House has considered funding for local authorities.

I thank the Chairman of the Backbench Business Committee and the Committee for allowing us good time to debate this serious subject.

In the summer of 2012, the Secretary of State for Communities and Local Government recognised the penalty for rural authorities—that is, that the formula for allocating funds to local authorities disadvantaged those in rural areas—and improved the sparsity weighting for the formula for the local government financial settlement for 2013-14. That was the good news for rural authorities, and the Government must be commended for recognising that historical inequality and for seeking to improve the funding formula for local authorities to take into account the higher costs associated with delivering public services in rural areas. I fully support the Government in their stated aim.

However, the Government seemed to have a little wobble. The damping model that the Department chose to minimise the swing in funding for councils wiped out all the gains from the improved formula for rural authorities, and as a result their total funding actually fell faster than that of urban local authorities. I am not seeking to steal money from urban authorities; I seek a fair deal for rural authorities as well.

The Department allocated a further £8.5 million to the most sparsely populated authorities after the rural fair share campaign. MPs pressed the Department and made our case. However, that is still only a one-off grant for 2013-14, and it distributes the £8.5 million to 95 local authorities in amounts ranging from £649,000 to £856,000. Is the Department considering ensuring that we have a little bit more money than that next year? In fact, I would like another £30 million at least. I probably cannot horse-trade too much, but it must be recognised that the rural authorities are not getting their fare share. Although welcome, the one-off grant makes no material change to funding disparities within the overall £22 billion settlement. That is a very big sum of money.

[Ian Mearns (Gateshead) (Lab)]

I hope the hon. Gentleman accepts that there are significant regional variations in the impact of the cuts. It is not just urban or rural; in some regions, both urban and rural authorities are facing significant disproportionate cuts in relation to national averages. The north-east of England is facing cuts across the board of about 23% in the next two or three financial years.

[Neil Parish]

The hon. Gentleman is right, because what the Government seem to have done—dare I be so blunt as to say it—is to ensure that those that least need it get the most money, by which I mean the south-east of England. Coming from the west country, I would of course say that. Many of my colleagues from the south-east probably do not necessarily agree with me.

--- Later in debate ---

[Neil Parish]

Indeed. I thank my hon. Friend the Member for Beverley and Holderness for pursuing the issue with great vigour, for considering the issue with Ministers with such tenacity, and for helping to secure this debate, as well as for the support and information provided by the local authorities in Devon and across the country.

A quarter of England’s population live in rural communities. Providing services presents many challenges to local government. This is particularly true in rural Devon, where there are serious barriers to services, with nearly 56% of residents living in rural areas across the county and with the house price to earnings ratio well below the national average. Lower than average wages and higher house prices is a trend replicated in other rural local authorities.

[Ian Mearns]

Reflecting on the point that the hon. Gentleman has just made, I know that many people regarded the council tax and its implementation as a blessed relief in the aftermath of the poll tax in the early 1990s, but unfortunately property valuations have not been reviewed to any great extent since then. An eight-band taxation system might have seemed fair at the time, compared with what there was before, but it has meant an awful lot of people in poor value properties paying a much greater proportion of their income in local taxation.

[Neil Parish]

The hon. Gentleman makes a good point. However, the Government that he supported had 13 years to change that and chose not to. The problem with opening up the issue of council tax banding is that it is probably a very big can of worms. I understand why successive Governments have not gone there, but that does not necessarily mean that one day we will not have to do it.

One of the biggest obstacles to providing services to a dispersed rural population is the high cost of transport, which has a knock-on effect on nearly all other areas of local government responsibility, such as adult and social care services, refuse and recycling, and ground maintenance. In 2009, 42% of households in the most rural areas had regular bus services close by, compared with 96% of urban households. These rural bus links are often the only way for many residents, particularly pensioners, disabled people and the unemployed, to access public services. I think I am right in saying that some 20-odd per cent. of the population of Devon has to go to work on buses, and if there are no buses, it is very difficult for them to do so.