Rural Councils: Funding

Jim McMahon Excerpts

Wednesday 29th November 2023 Westminster Hall

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Thank you, Mrs Latham. I apologise to the hon. Member for West Dorset (Chris Loder) for being slightly late; I was trying to get the printer to spring into action this morning. I congratulate him on securing an important debate on local government funding, and I am delighted to respond to it.

We all know that our councils are at the frontline of public service delivery, improving the lives of millions of people and the places they live, work and holiday throughout the year. They are also often the last line of defence when people fall through the net of other parts of the public sector. We also know that local councils have borne a disproportionate burden of cuts throughout what has been a lost decade of austerity that has seen £15 billion taken from English local government since 2010. Rightly, therefore, communities are anxious for the funding they desperately need. More fundamentally, change is needed in the relationship.

It is worth responding to the debate’s many thoughtful contributions. The hon. Member for West Dorset rightly pointed to the now very fragile nature of local councils. Many are looking at the next year or two and wondering whether they will be able to make ends meet or face insolvency. We have seen some councils already in that position.

There has been a lot of talk about the rural service delivery grant, which has an important role to play, but we need to rewind to the inception of that grant. It was born from the area based grant that was primarily targeted at urban deprived communities to deal with social and economic need. That grant was deleted with a week’s notice by the then coalition Government and was followed by the rural service delivery grant. We saw no new money to deal with the growing need in our society and our economy; there was just a transfer of money from one part of the country to another and from one type of council to another, without there being a proper, balanced assessment of the funding need across the whole of England.

There were many calls for that assessment, and the Minister and I, when we were on the Local Government Association executive together, made the call for an evidence-based approach to how councils are funded. It is not right that we pitch one area against another when, fundamentally, if an old person needs adult social care in any part of England, they ought to get it. If a young person is at risk of abuse, they ought to be protected in every part of England. The same is true of every public service.

The Government’s response in 2014 was to commission a review into the unit costs of service delivery. It was intended to take into account the disproportionate cost in very sparsely populated areas, where it naturally costs more to deliver some types of services. That should have been the evidence base. What we have seen is a gerrymandering of the system throughout the years, whereby the money is always directed for political endeavours. We have seen it with the high streets fund, the levelling-up fund and the rest of it, where the evidence base does not hold up to scrutiny.

Beneath all that, councils are not getting the funding they need to provide even the basic services for the local population.

[Alicia Kearns]

As a former civil servant, I take issue with the idea that, somehow, civil servants have agreed to a political formula. That is not how it works. Is he really suggesting that Rutland and Melton is a key red wall seat? We received £23 million of levelling-up funding, but I do not remember being at the top of the list of people who needed to be re-elected by being given some kind of handout from the Government. Funding was given on the basis of the best possible applications.

[Jim McMahon]

The debate is not about the levelling-up fund as much as about the debate around it. It is not for me to highlight which seats are or are not in scope of the target priorities of the Conservative party, but I do say that we need to move on from a system in which we shift around the country a diminishing resource that does not meet the need and when, one year, one council benefits but the next year, it may be disadvantaged. There has to be a funding formula that shows that every community gets the funding it needs and that takes into account the cost of need, the cost of demand and the cost of delivering those services.

We have heard a range of other contributions that I will not go into because of time, after taking that intervention. However, we must all acknowledge that the system we have is unsustainable. Several Members have said that there is no more money than there is in the envelope, and we have to accept that. The public finances are not in a good position. There is no wand that will magic up new money, but just looking at the local government purse without looking at the whole of the public sector would be an error.

We know that councils are best placed to deliver a wide range of services and that they are absolutely best placed for early intervention. We should not just look at local government; we should ask what we can do for worklessness, transport, and health and social care services, where earlier intervention by a local authority overall would cost the taxpayer far less and deliver a better outcome for local communities too.

There is no doubt that residents in local rural communities acutely feel the cuts that are being borne. That casts a unique shadow on our rural communities. We know, too, that there is hardship in those centres in relation to connectivity, schools and transport. It is not the fault of those councils, which are desperately trying to make it all work; in the end, it is about the overall funding settlement not being fit for purpose. We recognise that different councils have bespoke challenges that we need to address, and we have heard about some of those today: rural housing, social care and the cost of delivering services in very remote areas, whether those are schools, bin collections or public transport and their operations.

What does it mean in practice, if we do not get that right? It means, in the end, that the places that people care about and have invested in are ultimately disadvantaged. It means that town centres and village centres are no longer financially viable, and then we see shops being boarded up because the population cannot afford to stay there. Generations have to move further away, because they cannot afford to stay in their local areas.

The fact is that we have seen a lot of change in Government; we have seen a lot of change in ministerial positions and in the Secretary of State, but councils have just carried on going, waiting for a long-term funding settlement that never seems to arrive. The Rural Services Network found that the local government funding settlement for 2023-24 meant that urban councils were receiving 38% more per head from the Government funding formula than rural councils, which equates to about £135 per person. It is not difficult to see how that is arrived at, and the Government have said that they would fix what they have said was a “broken system”. At the Local Government Association conference in July, the Secretary of State for Levelling Up, Housing and Communities said that the system was “out-of-date” and needed “to be fairer”. We agreed with that, and we also accept that we cannot carry on.

We cannot continue to set one area against another. We see absolute deprivation in our rural communities, although it is sometimes quite hidden. If we look behind the net curtains in pretty, picturesque villages, we see people living in absolute desperation, struggling to make ends meet. We only have to walk across the road from Parliament, in one of the richest capitals in the world, to see people living in absolute poverty and desperation, too. Surely a fair funding formula would follow that need wherever it exists and be agile enough to make sure that it roots that need out. That speaks to a wider issue about the power balance. Far too much of the relationship is one of dependency of local government on central Government, and the funding regime massively contributes to that. The idea that councils are pitched against each other in a format like “The Hunger Games” is not a healthy relationship; it is not one of an empowered local government and it is certainly not very efficient, so we need to change it.

We know that the underfunding of our rural councils stunts growth, and Labour is prepared to sow the seeds of transferring power, so that our rural councils can determine their own fate. What should that look like? It is about local communities deciding for themselves what is right for their area; it is not about Ministers and civil servants in Whitehall, who are often miles away from the real impact. More than that, that new-found partnership with rural communities comes from a mission-led Government; a Government with a purpose, and a determination to see that purpose through.

We want our rural communities to have higher growth, to end the cost of living crisis, to have an NHS that is fit for the future, to have community energy where people have a stake in the future and where we all have energy security, and, of course, to have safer streets, with a commitment to have a further 13,000 police officers, many of whom will be deployed in our rural and coastal communities to tackle crime hotspots, where they exist. We also want our rural communities to have more opportunities for young people in schools in our rural communities, and we have heard much about that today and about how, in many ways, that actually goes beyond local government to the classroom, the local GP and to whether there is a bus service in place at all. That is a partnership that councils will have under a Labour Government.

We have heard a lot about Labour’s plans, our mission-led Government and what we want to do. We do not hear as much about a comprehensive plan from the Government, which I hope we hear in the Minister’s response today. It is a matter of fact that after nearly 14 years of austerity, the system is creaking to the point of being broken.

[Chris Loder]

I thank the hon. Member for his apology for being late; it is accepted. Does he agree that we should not be fooled that Labour cares about rural Britain? Where are they? The Labour Benches are empty. Not one single Labour MP was in this room when I started my debate. I say respectfully to the hon. Gentleman that I have sat here and listened to a lot of what he has had to say, and I am afraid the realities are that the current mechanisms benefit Labour areas far better than they do Conservative, or indeed Liberal Democrat, rural areas. I say respectfully to him that I think some of the points he is making are not well-founded.

[Jim McMahon]

If I can say so respectfully, that was a slightly cheeky intervention. The hon. Gentleman may well find that the Opposition Benches are populated by far more Labour rural MPs after the election. I also draw his attention to the Co-operative party rural commission report, in which I suspect there is a lot of common ground. Outside of the politics, the back-and-forth, and the rest of it, I find that we agree more than we disagree on the fundamental issues affecting rural and coastal communities at these times.