Local Government Funding: Rural Areas
Debate between Marcus Jones and Graham Stuart
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to respond to this important debate, and I start by congratulating my hon. Friend the Member for Beverley and Holderness (Graham Stuart) and other Members on securing it. I pay tribute to their valuable contributions and, in particular, to the great passion that my hon. Friend and colleagues have shown for our rural areas. I would like also to take this opportunity to recognise the hard work and dedication of rural authorities across the country over the past five years and their contribution to improving local services in challenging times. It is local knowledge, experience and capability that will help to overcome the challenges faced by rural communities, to improve local services and to grow rural economies. We are committed to supporting rural areas in fulfilling that role.
We recognise that rural communities face particular issues, and that some rural councils with low council tax bases face particular pressures. That is why we are determined to continue tackling the deficit to secure the country’s economic future, while also providing help and support to rural authorities. We want rural areas to contribute to and benefit from economic growth. The rural economy is worth £210 billion. Our rural development programme for England has invested more than £400 million in projects to support the rural economy, and we are investing a further £3.5 billion by 2020. We are also investing £780 million for areas that commercial broadband coverage will not reach. To support areas further, we will grow the local growth fund to £12 billion by 2021.
In December, the Secretary of State announced an historic four-year settlement for local government, on which we are consulting until the end of this week. Our proposal is designed as a sustainable pathway to transform over-centralised Britain into one of the most decentralised countries in the world. By 2020, local government will be entirely funded by its own resources—council tax, business rates, and fees and charges—which was never thought possible until very recently.
Since the beginning of this Parliament, we have been honest about the fact that this change must be fiscally neutral, and that we would phase out Government grants and give councils new responsibilities. We are currently consulting on the settlement, and all councils, including those from rural areas, and Members of this House are welcome to respond. Indeed, we can take many comments made by Members this evening as representations to that consultation. I have also already met a large number of local councils, as well as the Rural Services Network today, as part of that consultation. We had a very constructive discussion and I encouraged them—as I have encouraged all local authorities—to set out in full their detailed observations and suggestions in relation to the consultation.
We want to be candid about our proposal. It does require continued savings from local government in order to meet our deficit target, which should not come as much of a surprise to anyone. The unanimous view across local government is that the biggest cost pressure is on adult social care, which a number of Members have mentioned. Our introduction of the 2% social care precept flexibilities for adult social care and the additional £1.5 billion of extra funding for the better care fund, which will all go to local government, will help to address that, but we do not underestimate the challenges ahead. That is why we argued for the possibility of a four-year budget deal, so that authorities that are affected can look at ways in which they can smooth the path over the four years and use reserves, if they feel that that is appropriate and can be justified to the local authority. However, we also want to make it absolutely clear that, despite invitations to do so, we have made no assumptions in our published figures that councils will use their reserves, whereas the Office for Budget Responsibility assumes that councils will continue to add to their reserves during the spending review period.
Graham Stuart
Many rural residents will ask why it is that, given the need to make savings, the reductions in central Government spending power are disproportionately reducing more in rural areas than in urban areas. By 2019-20, Government-funded spending power in the East Riding of Yorkshire will be £214 per head, while in Kingston upon Hull it will be £468—a 14% reduction in Hull and a 28% reduction in the East Riding of Yorkshire. How is that right or fair?
Mr Jones
My hon. Friend has made that point a number of times. It is a significant contribution to the current consultation. I will come on to that point, but the package that we have put forward for local government will continue, notwithstanding his comments, to see a narrowing of the gap between the core spending power for rural and urban authorities.