Local Government Finance (Rural Authorities)

James Paice Excerpts

Monday 11th February 2013 Commons Chamber

[Neil Parish]

My hon. Friend is right. The position is the same in Devon, where the Devon county council leader made enough savings to get through the current budget and was going forward well, but his budget was cut yet again. That is the problem. Devon is reputed to have more roads than Belgium, for instance, which is why the cost of repair, particularly after the floods, is so large. [Interruption.] It is absolutely true. There are more roads in Devon than there are in Belgium.

Rural authorities have to deal with high fuel prices, and the cost of education in schools is much higher. Devon is the 244th lowest in the table for school funding. All these factors need to be taken into consideration by the Government so that we get a fair share. I have much more to say, but in order to give colleagues time to speak—

[Sir James Paice (South East Cambridgeshire) (Con)]

If my hon. Friend is drawing his remarks to a close, which would be a shame, may I urge him to address the issue that he promised to come on to, which was raised by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), about damping? It will mean that rural authorities will not see the gains to which they are entitled before 2020 and probably not at all.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We have already used 14 minutes, and every time we carry on, we are going to lose some speakers. It is that serious.

--- Later in debate ---

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

It is a pleasure to take part in this debate.

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

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

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

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

[Sir James Paice]

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

[Mr Stuart]

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

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

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

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