Local Government Funding: Isle of Wight

Rishi Sunak Excerpts

Tuesday 16th January 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to serve under your chairmanship, Ms Dorries, in my first Westminster Hall debate in my new role. I congratulate my hon. Friend the Member for Isle of Wight (Mr Seely) on securing this vital debate. In the short time that he has been in Parliament, he has already made an impression as a passionate and committed advocate for the Isle of Wight, and his speech demonstrated exactly why he has that reputation.

I welcome the chance to respond to my hon. Friend and thank him for sharing his knowledge of the Isle of Wight, an island of which I am particularly fond, having grown up just across the water in Southampton—or, as he described it, on the “north island”. His reflections on the Island, which is, as he says, the jewel of southern England, prompted me to recall the summers I spent enjoying all it has to offer to visitors. Just this weekend, while I watched Gary Oldman bring to life Winston Churchill in “Darkest Hour”, I recalled the Island’s Churchill trail. I remembered that, as a child, the former Prime Minster stayed at the home of his friend Jack Seely, and I wondered whether he had any connection to my hon. Friend’s family. Perhaps he will touch on that when he winds up the debate. Regardless, whether it is the Isle of Wight festival or Carisbrooke castle, Blackgang Chine or the Needles, I know just how much there is on the Island to enjoy, to educate and to entertain.

Members may know that today is the last day for responses to the consultation on the provisional local government finance settlement. I will say a few words about that before I come to the specific points my hon. Friend made. Last month, the Secretary of State confirmed the local government settlement, which provides two years of real-terms increases in the resources available to local government. The extra council tax flexibility that we have announced means that total core spending power, which is £44.3 billion this financial year, will rise to £45.6 billion by 2019-20. For the Isle of Wight, that means £132 million in 2019-20, up from £127 million in 2015-16. That represents a 4% cash increase overall, which is double the national average.

Councils know their communities best. They know their priorities, challenges and opportunities. I am aware that my hon. Friend is already looking at ways to raise the Island’s profile, generate jobs and support the tourism industry, and my Department applauds and supports those efforts. Indeed, councils across England are showing that they are capable of finding efficiencies while continuing to provide for their communities. They are playing their part in tackling the deficit, to which this Government remain committed. I am keen in my new role to build on the good work that is already under way. An important aspect of that will be giving local authorities the levers and incentives to grow their local economies. I was delighted to hear that the Solent authorities have been selected as one of the 100% business rate retention pilots for the forthcoming year.

The pilots have proved incredibly popular, with more than 200 authorities having put themselves forward for consideration. I therefore know that the Isle of Wight authority will be excited to have this special opportunity and am keen to see what we can learn from it. It is worth noting that the ability to retain 100% of business rates is estimated to benefit the Solent authorities by up to £3.3 million this year—extra resources that will be welcome and are a due benefit from driving local economic growth.

I turn to the specific points made by my hon. Friend, first and most importantly in relation to the geographical position of the Island. I am grateful to him for comprehensively setting out a number of the key issues affecting his constituency. I have noted carefully his concerns about how we currently distribute the funding available across local government. Clearly, the Isle of Wight’s geography makes the council’s position distinct and creates both opportunities and challenges. My hon. Friend made that point passionately, and it was acknowledged by the former Secretary of State for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), on a visit to the Island in 2016.

It is right that we recognise the specific situation of the Isle of Wight and our other islands in many areas of policy, and not just fiscal policy. What do we intend to do? First, I have asked my officials to continue exploring the various mechanisms in place in Scotland in relation to islands, which my hon. Friend mentioned, with a view to building our knowledge and evidence base. The Department will continue to take steps to inform our understanding of the various factors affecting the cost of delivering services on islands. For that reason, I was delighted to receive copies of the important research undertaken by the University of Portsmouth regarding the Island’s particular situation and potential consequences. Although I am not in a position to comment academically on the report as my hon. Friend asked me to do, it is welcome to have such thoughtful and detailed analysis to help inform the Department’s work. I note that he highlighted several other reports in addition.

I can tell my hon. Friend that this will not be analysis for analysis’ sake. He highlights this issue at a once-in-a-generation time when there is a possibility to do something about it. That is because my Department is embarking on a fair funding review. I reiterate the Secretary of State’s commitment to undertake a thorough, evidence-based review that uses the most up-to-date information available to assess both current and future resources and needs of local authorities. Members may be aware that we issued a 12-week technical consultation seeking views on exactly that at the end of last year. The idiosyncratic island factors we heard about today that drive specific costs are exactly what we need to hear about and consider in formulating a new funding formula.

I urge the Isle of Wight Council to submit any relevant evidence it has alongside other points it wishes to make in its response to the consultation, which we will consider carefully. Furthermore, I will take the opportunity offered by my hon. Friend to meet him and perhaps colleagues from the University of Portsmouth and his local authority to discuss the findings in more detail, as part of future conversations on the fair funding review. More broadly, I will be encouraging input from all Members and representatives from across local government so that we can work together to create an updated and more responsive local government financial system.

My hon. Friend also raised the rural service delivery grant, noting that the Island is not currently a recipient. That is, as he said, due to the particular sparsity methodology it uses. We recently announced that the grant will be funded through increased business rate retention from 2020-21, when we aim to implement our fair funding review, which will redistribute business rates across the sector. He may well have given us a good example of why we need to revisit the underlying basis for relative needs allocations between local authorities, as many of the formulae have not been updated in more than a decade.

Similarly, my hon. Friend made the point about population growth, particularly in the age categories that drive social care. As I have discovered in the past week, the formulae we currently use are relatively old and do not dynamically take into account changing populations, which his council is experiencing. As I have said, the review is looking afresh at how we take such key factors—rurality, remoteness and population growth—into account. I therefore welcome Members’ support in helping us to deliver an outcome that is robust, collaborative and evidence-based. This is the perfect time to shape the discussion, with our consultation currently live.

My hon. Friend mentioned the local government finance settlement. As he knows, we are three years into a four-year deal that provides funding certainty for those councils that published efficiency plans. I am delighted that the Isle of Wight took up that offer. We recognise the pressure faced by all local authorities, particularly in the light of pressures in areas such as social care. That is why, subject to Parliament’s approval, the Government will increase the core referendum principle. As a result, the Isle of Wight specifically will have the flexibility to increase its council tax by up to 6% this year, delivering funds of up to £4.9 million.

I understand that the council is awaiting responses to its consultation on the 2018-19 budget and that there is to be a public meeting today with members about how best to allocate funding. It is good to see the Island’s community steering the council’s vision on issues such as partnership working, adult social care and housing. I look forward to receiving the council’s response to the provisional settlement. My officials will look carefully at that and consider all the responses ahead of the imminent final settlement in a few weeks.

On devolution, the Government are committed to empowering local authorities and rebalancing the local economy through local devolution and growth deals. We know that devolution can bring multiple benefits, including more accountable and effective institutions at the right scale, but I note my hon. Friend’s points. It is clearly important that we work towards a model that works for each individual area. I understand that the Minister for Local Growth, my hon. Friend the Member for Rossendale and Darwen (Jake Berry), is visiting my hon. Friend’s area in March, and I look forward to hearing about those discussions.

Lastly, on infrastructure, skills and business support, I recognise that my hon. Friend has an inspiring vision and strong ambitions for the constituency he represents so proudly. It is right that Government do their best to support those aspirations. I am pleased to note that the Government have supported investment in those areas on the Isle of Wight through the growth deal awarded to the Solent local enterprise partnership. Through the LEP, £14.7 million of funding has been invested locally, through the centre of excellence for composites, advanced manufacturing and marine at the Isle of Wight College and the Floating bridge at Cowes. The LEP has also invested £750,000 of regional growth funding, which was used to set up the rural business fund. All of that will help contribute to the Island’s economic growth, leveraging private investment, creating jobs and assisting the rural sector.

Again, I thank my hon. Friend for calling this important debate and for bringing these issues to my attention so early in my tenure. He is right to be ambitious for his Island and to fight for it to get the consideration it deserves. I look forward to working closely with him in the coming months to address the challenges and opportunities he has highlighted.