Local Government Finances

Lord Foster of Bath Excerpts

Thursday 21st March 2024 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, I too begin by congratulating my noble friend Lord Shipley on securing this debate and on his excellent introduction to it. I want to concentrate on just two issues: arts and culture cuts, and the unfairness in the allocation of funds between rural and urban areas.

In 2016, the chief executive of Arts Council England, Darren Henley, published a book, The Arts Dividend; Why Investment in Culture Pays. He argues in it that the dividends from investment in the arts and culture include encouraging creativity, helping educational attainment, improving health and well-being, supporting the creative industries, providing defining characteristics to villages, towns and cities, contributing to economic prosperity and enhancing our global reputation.

The noble Baroness, Lady Bull, and the noble Earl, Lord Clancarty, made similar points, and I understand that the noble Lord, Lord Freyberg, may well say something about this, too. Indeed, the noble Earl referred to a debate that he secured back in 2017 on local arts and cultural services, during which reference was made to a speech given earlier that year by the then new chairman of the Arts Council, Sir Nicholas Serota, who said:

“I need to voice long-term concerns around public investment, and especially the loss of local authority funding—which is now the most pressing issue, day to day, for many cultural organisations across the country”.


Seven years on, with further losses to local authority funding, the situation is dire. The extra £600 million this year does not begin to address the acute funding and service demand pressures on councils, which are now merely managing decline.

Our councils are the biggest funders of culture, spending around £1 billion in England on services such as libraries, museums, heritage and the arts. Most are discretionary, not statutory, but many councils are trying hard to protect them as they see the benefits to residents. However, with continued funding cuts, it is ever harder. Spending reductions in cultural and related services are now higher than for any other service area, and councils are warning that further cuts can be expected. As others have said, to avoid still deeper cuts, councils are selling off their assets at a rate of knots. One survey suggests that an average of 6,000 assets, from swimming pools to libraries, are being sold every year, which certainly does not bode well for the future.

A possible lifeline—the levelling-up funds for local councils—is simply not getting through. As the PAC announced last week, only 10% of levelling-up funds have been spent, due to delays in funds being received by councils. Can the Minister explain what is being done to speed up those payments? More importantly, does she accept that councils’ arts and cultural services are not a luxury but are integral to supporting communities, contributing to the economy and helping individuals live more fulfilling and healthy lives? If she does, can she tell us what plans the Government have to reduce their decline?

Some councils are better placed than others to sustain such services, so I turn to the issues impacting rural communities. In 2015, the then Defra Secretary, Liz Truss, claimed:

“This Government … is committed … to ensuring the interests of rural communities and businesses are accounted for within our policies and programmes”.


Four years after that claim, I chaired your Lordships’ special committee on the rural economy, which concluded that her commitment had not been met and rural areas were losing out. We demonstrated that, for many rural services—health, dentistry, public transport and policing, among others—government funding per head was lower for rural areas than for urban ones despite higher delivery costs. For policing, for example, the current funding formula means that, in Suffolk, where I live, we get a Home Office grant of £114 per resident, whereas Merseyside gets £217.

The committee also demonstrated that rural house prices and rents were higher despite lower wages’ that broadband and mobile connectivity were worse; and that government funding to rural local councils was lower, meaning higher council taxes for rural dwellers. The evidence was clear that rural areas were being unfairly treated, not least in the local government funding settlement.

Five years on, little has changed: all of these disparities remain. Of course, there have been some welcome initiatives—Delivering Rural Opportunity, published only on Monday, lists some of the Government’s favourites —but, despite such welcome initiatives, huge disparities remain between rural and urban areas. In times of reducing public expenditure, it is ever more important to distribute available resources fairly.

Michael Gove, in the final local government finance settlement update, appeared to suggest that he had cracked it. He said that,

“in response to the consultation feedback and in recognition of the specific challenges and difficulties local councils can face serving rural, sparse populations, we are increasing the Rural Services Delivery Grant by £15 million in 2024-25”.—[Official Report, Commons, 5/2/24; col. 6WS.]

Of course, any increase is welcome, but, as the Rural Services Network has pointed out, the extra money will go to only a limited number of rural councils—only the top quartile—based on a “super sparsity” measure. Very many will get no extra funding.

Even with this small amount of extra cash for a few councils, huge rural/urban disparities will remain. The RSN analysis for 2024-25 shows just how stark it will be. Urban local authorities will receive some 36%—£141—more in government-funded spending power per head compared to rural authorities. Rural residents will pay, on average, 20%—£112—more per head in council tax than their urban counterparts because rural councils are still getting less government grant. This simply is not fair. Rural communities continue to be disadvantaged and their residents left behind at a time when the aim is supposed to be levelling up across the country.

Ten years ago, the Government seemed to acknowledge the need to do something about this and changed the funding formula to make it fairer. But, in effect, they then did not use it. They added and froze in place a “damping process”. As a result, there are councils in London receiving millions of pounds more than the Government’s own formula says they should and rural councils getting far less than they should. Of course, I want to see the size of the pot increased, but, whatever its size, it should be allocated fairly. Does the Minister accept that it is not being, that rural communities are losing out and that the damping process should be phased out? All councils are getting a poor deal from this Government, and rural councils are getting the worst deal of all.