Local Government Funding: Rural Areas

James Heappey Excerpts

Monday 11th January 2016 Commons Chamber

[Simon Hoare]

No, and for reasons that I will explain to my hon. Friend in just a moment.

If I took Members to my North Dorset constituency—this echoes what my hon. Friend the Member for Beverley and Holderness, the hon. Member for Workington and others have said—they would see that it looks lovely, and it is lovely. But we have poor public transport, notwithstanding the excellent service that Damory tries to provide with the budget it receives from the county. The majority of my residents are retired. We have poor and patchy broadband. We have an historical low skills base. We have a poor road infrastructure. One of our straplines is, “Come to Dorset; there are no motorways.” Forget motorways; we have no dual carriageway in my constituency. Indeed, a passing place on a B road is greeted like an oasis in the desert. Access to affordable housing is constrained. The average salary of a vast number of my residents is well below the national average—the national average is about £24,000, but in my constituency it is about £17,500. A large number of my constituents are tenant farmers, or those associated with agriculture, living in tied accommodation.

Therefore, although those wonderful rolling hills and green pastures of the Blackmore vale look enchanting, and while the area of outstanding natural beauty of the Cranborne Chase is indeed beautiful, there are pockets of deprivation in those rural areas, for example in Blandford Forum, Shaftesbury and Gillingham, and for some unknown reason no wise expert in either the Treasury or the Department for Communities and Local Government can find a perfect mechanism for measuring that rural deprivation. That is a huge gap in how we approach the settlement.

[James Heappey (Wells) (Con)]

My hon. Friend is speaking with his customary eloquence. I simply rise to add to his list of challenges. It is not just public services that challenge us; the inability to access banks and other amenities means that people in our communities have to travel that bit further to do their banking or grocery shopping, and that all adds to the cost, particularly when it comes to public transport.

[Simon Hoare]

My hon. Friend is absolutely right. He can add to that litany the fact that something as simple and mundane as a waste collection service costs far more in a rural area than it does in an urban area. It is far easier for a large rubbish truck to trundle up and down the terrace streets of Cardiff, Bristol, Manchester or Birmingham than to go up hill and down dale, and from one house here to two farms there, so it is more expensive. The costs of getting children to school on transport provided by the county council is higher. The cost of everything is higher. It costs more to heat homes, because they all predate cavity wall insulation, and because conservation area status and listed buildings simply preclude double glazing, solar panels and the like.

At every step, when we analyse it in the cold light of day, there is precious little reason to live in a rural area today. The difficulties are compounded when a Conservative Government who had had at the heart of their manifesto the firm commitment, on which I certainly stood, of rural-proofing these things, free from the fetters of the yellow peril of the Liberal Democrats—[Hon. Members: “Hear, hear!”] The House is free of it now, too. The Government are now suddenly appearing to shirk the task that Conservative Members wish them to undertake.

Let me deal with the three things that I find particularly irritating within the proposed settlement and pick up the point made by my hon. Friend the Member for South East Cornwall (Mrs Murray). If only Dorset County Council had four years to deliver the medium-term financial strategy that it had planned—the £13 million-worth of savings that it had identified—but Dorset, like Buckinghamshire, has been given two years, and then its revenue support grant disappears. That is why I am afraid I cannot welcome what my hon. Friend asked me to welcome. East Dorset District Council, in which part of my constituency falls, sees its RSG disappear after one year. With no prior warning, no consultation and no advice, its medium-term financial strategies are now shredded.

That is unfortunate, because the local government of Dorset was significantly reviewing what it did. Exciting proposals were coming forward and a vivid debate was going on about large unitary districts, a combined authority and so on, all with the expressed aim of helping my hon. Friend the Minister and my right hon. Friend the Chancellor achieve what we all want to see—economic efficiency, with services delivered at the best possible price for the council tax payer. All those potential proposals have had to be put on hold while a reduced officer corps desperately tries to focus on which service is more, or less, important and must not just have the fat trimmed off—we have gone through the surface of the bone and, in some instances, are sucking out the marrow.

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[James Heappey (Wells) (Con)]

I would like to start by introducing a bit of balance, to make the Minister aware that we are not all entirely against him, and welcome the commitment the Government have made to equalise spending on schools. My hon. Friend the Member for Beverley and Holderness (Graham Stuart) secured an excellent debate in Westminster Hall at the end of last year in which we were able to advance our views. We had some very encouraging responses from the Minister’s colleague, the Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah).

We very much welcome the investment the Government are making to tackle poor broadband connections in rural areas, their commitment to encourage the mobile phone industry to tackle “not spots”, their welcome commitment—this is particularly important in Somerset —to improve flood defences in our county, and some very important improvements to our road and rail network, so it is not all bad. While imperfect, these Government funding commitments are very welcome and will be an important development to our local economies. It would just be great if they could be accelerated.

That said, Somerset is among the worst-funded local authorities in the country. Currently, those in Hackney receive well over three times the amount per head than residents in Somerset. I do not doubt there are plenty of challenges in Hackney, but it is important that the House recognises that there are plenty of challenges in rural areas too, many of which have been articulated well this evening. I will come on to talk about some of those challenges in my area, but it is important to realise the real deprivation in rural areas too. Some of the most deprived wards in the south-west of England are in my constituency, yet they are in towns and villages that, if I were to list them, would make people picture something very different from the reality of some of the lives of their residents. There is digital exclusion, too, and an isolation that is not felt in urban areas. Lower average earnings, a deteriorating demographic, and poor road, rail and bus connections add to the deprivation I have just mentioned.

Given the challenges we face in Somerset—and in Dorset, Devon, Cornwall and all the other places represented here this evening—one would imagine that the funding formula would be set to close the gap. Sadly, that is not the case. Urban areas will lose about 21% of their funding in the next five years, but in Somerset we will lose 26%. There will be Members in the Chamber whose counties will be losing even more than that. As a proportion, the gap is widening not closing.

It is important to place it on record that our local authorities in Somerset are guilty of good behaviour. They have already been riding to the instructions the Government have set. Sedgemoor District Council recently announced a co-operative working arrangement with South Somerset District Council, which crosses the partisan divide. There is a sharing of chief executive and there are greater synergies in the back office. Mendip District Council has a fantastic hub in its council offices, which brings together police and other local services so they can all take advantage of that council building and achieve a saving. Indeed, it has been outsourcing many of its functions to achieve greater cost-effectiveness.

Somerset County Council, too, is guilty of good behaviour, having worked incredibly hard to tackle the enormous debt left by the previous Liberal Democrat administration—no matter how much the latter try to forget it when criticising the council. It is heavily involved in joint working with Devon, North Somerset, and Bath and North East Somerset, and is considering the smarter use of buildings. Particularly successful is how it is trying to use libraries: Glastonbury library will soon be overhauled and be a place not only for books and the internet but to see the police, the citizens advice bureau and local council and public health representatives —all sorts of things delivered under one roof, achieving a welcome saving for local government.

This evening, we have heard many examples of the challenges of rural life and the expense, both public and private, to our constituents. On a particularly pressing issue, Glastonbury, which Members might consider to be a significant place, has recently discovered that all three of its remaining banks are to close within 12 weeks of each other. It is an extraordinary thing to happen in a place as important and internationally famous as Glastonbury, yet it is going to happen. All those who walk to the bank in Glastonbury, many of whom are elderly or less mobile, will now have to get the bus to Street or elsewhere. The banks will say, “You can do all this online”, but these are the people, even if they have the connectivity, who are least comfortable online. They will travel on the bus, requiring a public service they would not have needed if at least one of the banks had stayed.

We in rural areas pay the same for our mobile phones and internet connections as those who live in urban areas, yet we get so much less, and we travel further for our healthcare. Some appointments are inaccessible for those who rely on public transport. There are parts of my constituency from which one cannot reach Taunton, Yeovil, Bath or Bristol for an out-patient appointment, or from which it is extraordinarily difficult to reach a GP surgery or health clinic. I have met constituents who allowed minor conditions to fester because they put off making the journey until it became sufficiently urgent that they needed an ambulance to hospital. That cannot be right.

I have met young people in my constituency who allow the cost of public transport, or their inability to access a council-funded bus pass, to influence their decisions about the qualifications and education they seek post-16. It is ridiculous that they should limit their life chances because they cannot afford a bus pass to get to college to complete their A-levels, apprenticeship or something else.

My hon. Friend the Member for South East Cornwall (Mrs Murray) spoke eloquently about carparks. Free parking is very important to the rejuvenation of our high streets, yet local authorities are over a barrel because parking has become an essential part of their revenue generation, meaning they cannot free up free parking because they would risk no longer being able to balance their books. That is a real challenge.

Adult social care, which we have spoken about already, is a huge and growing expense. The south-west, and Somerset in particular, is a popular place for retirement. I welcome that and think we should celebrate it—it is because it is simply the most beautiful region in the UK—but that growth in the retired population comes at an extraordinary cost. I met a carer before Christmas who told me that her clients for a day were spread over 300 square miles. That means that that carer can see fewer people than her counterpart in an urban area, which means that the cost of adult social care is so much greater in our part of the world.

[Sue Hayman]

Very briefly on vulnerable older people, I was shocked to discover that nearly 300 elderly people died in Cumbria last winter because they did not have proper heating or were not able to look after themselves properly. If the cuts to rural authorities continue, I am concerned that carers will not spot these vulnerable people as they have in the past and the problem will be exacerbated. Does the hon. Gentleman agree?

[James Heappey]

I very much agree with the hon. Lady. I, too, have been struck by what I have heard when I have met social care providers in my constituency. While I trust absolutely that they would deliver first-rate care on their visits, they have been imploring me to get permission for them to visit people just once a day for 30 minutes, rather than twice for 15 or 20 minutes. That might make sense, in that ultimately the person will be getting one, better quality visit, but it would reduce the contact that these vulnerable people have with the outside world and extend the length of time they go without seeing anybody who is supposed to be keeping an eye on them. That is a challenge we face, and we may have to go for what the care providers are suggesting, but it would come at considerable risk.

That is an example of just how expensive it is to do these things in our parts of the world, and the Government need to recognise that in the way they fund local authorities. We understand well—certainly those of us on the Conservative Benches—the Government’s need to balance the nation’s finances. I have been struck by the sentiment expressed this evening, which is very much not that we expect more from the Government but that we expect fairer spending in what they have already committed to spend. I implore the Government please to implement the rural services delivery grant not in part but in full, and as early as possible; to incentivise our councils by confirming that they can keep all that they raise in rates; and to commit to ending the inequality between urban and rural funding, albeit not by asking rural residents to bridge the gap by paying higher taxes, when, as I have said, they are already enduring a higher cost of living, and on lower wages too.

Above all else, let us certainly commit to ensuring that the gap will not widen on this Government’s watch. Sparsity ensures that the cost of doing things in places such as my constituency is more expensive than doing them elsewhere. As I have said, carers spend longer in their cars. School buses are required to carry more pupils over longer distances, which requires more fuel, and the same goes for rubbish and recycling trucks. Less can be done online because there simply is not the connectivity. We pay more in tax and receive less in Government spending, and all to achieve the minimum in local authority service provision. We are asking Somerset County Council to achieve something akin to alchemy. While I applaud it for doing a very good job indeed, it is little wonder that things such as bus services, libraries, road improvements and myriad things besides—things that we would think of as essential to providing the grease for rural life—are coming to be seen as discretionary.

In rural areas we face deprivation, isolation, higher taxes and a contraction of the local services that are so valued and needed by our constituents, and we risk making that worse, not better, under this Conservative Government. I urge the Government to find another way. We must spend our money more fairly and bridge the gap between rural and urban.

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[Mr Reed]

I am afraid that I can insist on fair funding. I believe that when resources are available, they should follow need. Unfortunately, that is not what is happening under this Government. I spent a few happy days in the hon. Gentleman’s constituency over the new year—I spotted a marvellous picture of him on the notice board in Milton Abbas—but I understand that such areas are suffering because the Government have not managed to get this right.

Previously we have heard the Government talk about an alleged improved funding settlement for rural areas, and perhaps we will hear that again from the Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones) this evening. That is not what we have been hearing from his own Back Benchers today, however. The Government have been trying to play off poorer rural areas against poorer urban areas, but this cannot be a race to the bottom. This should be about helping communities in every part of the country to thrive.

[James Heappey]

Will the hon. Gentleman give way?

[Mr Reed]

I will not, if the hon. Gentleman will forgive me. I am supposed to take only 10 minutes for my contribution.

Despite a string of assurances from the Government, we still have no idea how they will ensure a fair share-out of funding once business rates are localised. They have failed to make any announcement on how an equalisation mechanism might work, despite promising that such an announcement would be made during the autumn statement. Rural authorities remain concerned that the localisation of business rates could work against them, depriving them of funding and allowing them to fall back in relation to non-rural areas.

[James Heappey]

I thank the shadow Minister for giving way. I understand from the Chair that there is no time limit, so he has time to take our interventions. I say this to him in the softest way, because tonight’s debate has been refreshingly non-partisan. Rural Britain is listening, and it is not clear that you are advocating a rebalancing to close the gap. My apologies, Madam Deputy Speaker—I have just committed a deadly sin! It is apparent to me that the shadow Minister is not committing to a rebalancing between urban and rural areas. I invite him one more time to commit to that, so that we can all be clear that that is Labour policy.

[Mr Reed]

I do not think either rural or urban Britain would welcome the hon. Gentleman’s implication that this should be a race to the bottom, with one part of the country competing against another. Resources should follow need, fair and simple. That is what will lie at the heart of a fair funding mechanism, which I hope the Minister or someone from the Government will be able to announce to us before very much longer.

The rural authorities that have the concerns I have expressed are right to be worried. Westminster City Council, which covers the major shopping centres in central London, collects 8% of all of England’s business rates income—that is more than Birmingham, Manchester, Sheffield, Liverpool and Bristol combined. Without a fair redistribution system, rural communities, like other communities in the country, will simply be left to sink. As my hon. Friend the Member for Workington (Sue Hayman) pointed out, many businesses in sparsely populated rural areas pay little or no business rates. The Government have failed to invest in the world-class broadband infrastructure that could and should be a catalyst for business growth in those areas. There is simply no capacity to replace funding that will be lost when the revenue support grant goes.

The Government like to talk about their commitment to devolution, but we know that that is not real from the fact that the Secretary of State who sponsored the Cities and Local Government Devolution Bill is also sponsoring the Housing and Planning Bill, which contains more than 30 measures taking power away from local communities and centralising it here in Whitehall. Rural communities are feeling the gap between reality and Government rhetoric the most. The biggest devolution deals have been agreed with city regions, leaving most county areas and rural areas to fall behind yet again. Those areas need to be a full part of the devolution agenda, too; they cannot just be a footnote to city deals.

Rural areas have had a raw deal for a long time; they have been cut out of funding, investment and new powers. I welcome this debate, in which some excellent and interesting points have been made by Members from all parts of the House, and I hope that this evening might mark a turning point in the Government’s neglect of rural Britain.

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[Mr Jones]

That brings me back to why we introduced a four-year settlement. In a moment, I wish to talk about the move to full business rate retention. Hopefully, within those comments, I will be able to reassure Members that, at this point, it is by no means a done deal.

We have given careful consideration to the challenges that rural areas face. That has led us to propose an increase in support for the most sparsely populated rural areas by increasing the rural services delivery grant from £15.5 million this year to £65 million in 2019-20.

As hon. Members know, the new homes bonus was due to come to an end, but our view is that it has been a useful contributor to the increase in planning permissions being granted, with payments since its introduction in 2011 totalling just under £3.4 billion, reflecting the building of more than 700,000 new homes and the bringing back into use over 100,000 empty homes. We have been able to retain the new homes bonus, subject to reforms on which we are consulting and on which views are being encouraged.

Overall, our proposals are fair. Core spending power for councils will be virtually unchanged over the Parliament—£44.5 billion in 2015-16, and £44.3 billion in 2019-20. This is a substantially slower pace of spending reductions than councils had to deliver between 2009-10 and 2015-16.

The rural-urban funding gap has been falling year on year. Between 2012-13 and 2015-16 it went down by over £200 million, decreasing from 11% to 6% for unitary authorities and from 19% to 11% for districts. Our proposals mean that it will continue falling throughout this spending period, and core spending power will increase by 0.2% for rural areas, compared with a 0.7% reduction for urban areas, by the end of the Parliament.

[James Heappey]

Will my hon. Friend confirm that if the gap between urban and rural is closing, albeit slowly, unfortunately that is happening on the back of an increased council tax burden in rural areas?

[Mr Jones]

I hear what my hon. Friend says. Council tax is now 11% lower in real terms than it was in 2010. The Government’s assumptions do not assume a 2% increase in council tax, but a consumer prices index inflation increase in council tax. The calculations also show that once we get to the end of this Parliament, if councils were minded to take up the flexibility that has been offered, council tax would still be lower in real terms than it was in 2010.