Funding for Local Authorities

Robin Walker Excerpts

Thursday 10th October 2013 Commons Chamber

[Neil Parish]

The hon. Gentleman makes a good point. However, the Government that he supported had 13 years to change that and chose not to. The problem with opening up the issue of council tax banding is that it is probably a very big can of worms. I understand why successive Governments have not gone there, but that does not necessarily mean that one day we will not have to do it.

One of the biggest obstacles to providing services to a dispersed rural population is the high cost of transport, which has a knock-on effect on nearly all other areas of local government responsibility, such as adult and social care services, refuse and recycling, and ground maintenance. In 2009, 42% of households in the most rural areas had regular bus services close by, compared with 96% of urban households. These rural bus links are often the only way for many residents, particularly pensioners, disabled people and the unemployed, to access public services. I think I am right in saying that some 20-odd per cent. of the population of Devon has to go to work on buses, and if there are no buses, it is very difficult for them to do so.

[Mr Robin Walker (Worcester) (Con)]

My hon. Friend is making an excellent speech. Does he agree that that also has a massive affect on education and the cost of getting children to school in rural areas, which is not part of the education funding formula but is part of local authority funding?

[Neil Parish]

My hon. Friend makes a good point about the distances involved in getting children to school. Also, in rural areas we have many smaller schools, which are very good schools but are more expensive to run.

Despite the fact that rural areas have been underfunded, I would highlight the very good services that education authorities, schools and those across the piece have managed to deliver in very difficult circumstances. However, that does not mean that we should sit here and allow the Government not to give us a fair share. I want to put it on the record that I believe that we have very good services, despite the meagre amounts being spent on them.

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[Stephen Phillips (Sleaford and North Hykeham) (Con)]

It is a pleasure to follow my hon. Friend the Member for Beverley and Holderness (Mr Stuart), not only because he made a powerful speech, but because he is the co-chairman of the rural fair share campaign. I am sorry that he is still co-chairman: I had hoped that by now he would have lost his job. I say that not because he does not do a great job, but because I too remember the magic of last summer—the sun shining in the sky, the London Olympics, and the promises from the Government and their recognition that communities such as the one I represent have had a raw deal for far too long. Public services in Lincolnshire and many other shire counties cost at least as much, if not more, to run than they do in urban areas, but urban areas receive this fantastic extra grant from the Government of 50% more per head, while those on the lowest incomes can be found in the rural communities we represent.

Like every other MP with a rural constituency who has spoken, I tell the Minister that we have to do something about this. It does not matter who has been in government, this injustice has gone on for far too long. Our constituents do not deserve the thin services that the hon. Member for North Devon (Sir Nick Harvey) mentioned, any more than constituents in urban areas deserve them. We deserve precisely the same public services and I therefore support in full the campaign that the hon. Gentleman and his colleagues are running and to which I have signed up. It is time that this injustice was removed.

I have nothing new to say to the Minister other than what has already been said. Every hon. Member has recognised that we are in difficult financial times—times of austerity—and has taken solace from the fact that the vast sums of money that were poured into local government evidently did not deliver brilliant public services because the removal of those sums, as we now know from the BBC/ICM poll today, has not made people dissatisfied with the local public services they receive. In those circumstances, in which local councils—especially in rural areas—have made the sacrifices, efficiencies and economies that they were asked to make, is it really too much to ask the Government to give them the settlements that they deserve year on year so that they can deliver the public services that constituents who live in rural communities deserve?

I venture to suggest to the Minister, sagacious as he is—

[Mr Robin Walker]

Good-looking!

[Mr Graham Stuart]

Svelte!

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[Mr Robin Walker (Worcester) (Con)]

It is a pleasure to follow two such eloquent speeches by my hon. Friends the Members for Beverley and Holderness (Mr Stuart) and for Sleaford and North Hykeham (Stephen Phillips), touched by the very magic dust that they invoked in making their case so strongly. I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) on securing this debate and thank the Backbench Business Committee for granting it.

The topic of how we fund our local authorities may sometimes seem arcane—a matter for policy wonks or political theorists—but as earlier contributions to the debate have shown, it is in fact intensely practical, with real and direct implications for services in all our constituencies. I am grateful to my hon. Friend the Member for Penrith and The Border (Rory Stewart) for making such a strong case in principle for this small amount of funding that could make a very big difference in rural areas.

In debating this subject, we touch on the very machinery of the country and the whole range of services on which our electorates depend. I do not make the case for endlessly increasing local government funding, as perhaps some Opposition Members have tended to do. My constituents are clear in the belief that local government needs to bear its share of the burden in reducing the deficit and restoring our economic credibility, which was so damaged under the previous Labour Government.

A number of colleagues have mentioned the BBC survey, which shows clearly that it is possible to deliver improved services in difficult circumstances if we work hard at it, something that both Worcester city council and Worcestershire county council have managed to do in the past few years. In recent surveys my association has been conducting across Worcester, the vast majority of my constituents believe that local councils can do more to reduce waste and improve efficiency. Even a substantial majority of those who assign themselves as Labour voters agree with that statement.

What I will make the case for is fairer funding. Each area should get its fair share and should have the best opportunity to deliver services fairly. I am not making the case for each area to pay the same council tax, but it is noticeable that in general, as many colleagues have pointed out, the very rural authorities that are getting funded less are on average paying higher levels of local taxation than urban authorities. Surely it should be a matter for local decision makers to decide what should happen with regard to council tax and to bear in mind the wishes of the people who elect them.

Worcestershire county council has done an admirable job of keeping council tax frozen for a number of years, but it is noticeable that our council tax payers bear a higher share of the burden of the cost of vital public services in our part of the world than they do in urban authorities elsewhere in the west midlands. Worcester city council has made millions of pounds of savings in the past couple of years, but it fears that further cuts will be necessary in the years ahead as a result of not getting a fair share of funding.

I want both our councils to have the best chance of keeping council tax frozen for as long as possible, but to do so we need to ensure that we are getting our fair share of funding from Westminster. I want councils such as Worcestershire to be able to continue to have no library or Sure Start centre closures because they have managed things properly, and to receive fair funding from the Government. As others have already set out, as it currently stands the local government funding formula is not fair and it disadvantages rural areas. The huge gap—on average approximately 50% between rural areas and purely urban areas—is shocking and unjustifiable.

As a member for a city seat it may seem strange that I should be concerned about this, but Worcester, like many county towns, suffers a double penalty by being an urban district in a rural county authority. The vast majority of our funding is granted on the basis of the county unit, with little or no account taken of the many specific urban problems we face. Within Worcester, there are super output areas in the top percentile of deprived wards in the country, yet the overall funding that our local authority receives reflects what might be expected for a green and leafy prosperous county. As other Members have pointed out, rural does not necessarily equate to prosperous.

Worse, and as other colleagues have pointed out, there are additional pressures on all rural authorities, with extra travel costs for almost every part of local government, smaller units covering wider areas and particular challenges for social care. Where these costs are shared among all areas of a county, it is not surprising that the urban core can sometimes miss out. I therefore strongly support a better deal for rural areas and believe it is in the interests of all my urban constituents for the challenges of rural sparsity to be better recognised in the funding system. The local government funding formula is by no means unique in disadvantaging rural areas, as other formulae in education and health do the same. Unfortunately, these effects do not exist in isolation for each individual department, but have a cumulative impact.

In other debates, I have regularly made the case for fundamental reforms to the school funding formula, and I am grateful for the support of both Liberal Democrat and Conservative colleagues. I shall continue to make the case, but as the majority of funding for schools still passes through local authorities, this is not irrelevant to today’s debate. In fact, the growth of academies and the diminution of local authorities’ role in allocating school funding has created additional pressures as lower funded local education authorities struggle to achieve the same economies of scale as they once did.

The so-called education service grant, or the withdrawal of funding from local authorities for the funding of academies, has placed an extra burden on local education authorities in the worse-funded areas, as it has been withdrawn at a national average rate while these areas tend to receive much lower than national average funding. In Worcestershire’s case, this means that we are giving £116 back to the Treasury for every academy pupil, even though the actual funding that it would have spent in maintained schools was £101. Now is not the time for me to fulminate against the outrageous £1,100 per pupil funding gap between pupils in Worcestershire and in neighbouring Birmingham.

[Daniel Kawczynski]

I pay tribute to my hon. Friend for the extraordinary role he has played in this Parliament in setting out the all-party caucus for campaigning on changing the funding mechanism. This change is the No. 1 pledge I have given to my constituents. For the record, I would like to thank my hon. Friend, and I am sure that other hon. Friends would want to do so, too.

[Mr Walker]

My hon. Friend is extremely generous. I believe this campaign has strong support across the Back Benches. It is an issue that we can take forward; we must see real progress made on it. I am grateful for my hon. Friend’s comment, but it is, of course, a team effort in which many others have played their part.

In Worcestershire as in many other counties, the education department shares staff and resources with the broader children’s services area, so wherever education funding is under pressure, it places additional pressure on other aspects of children’s services, including looked-after children and safeguarding—issues raised by a number of Opposition Members. As a long-standing supporter of the f40 campaign and having met Ministers many times to discuss it, I know that reform of the school funding formula is on the way and I have every confidence that we will eventually get a fairer deal, but we need to learn the lessons of what seems to have gone wrong with local government funding and not repeat the same mistakes.

It appears that in this case the Government set out to correct some of the imbalance in funding for rural local authorities, but then introduced a damping mechanism that outweighed the impact of the change—effectively, as my hon. Friend the Member for Beverley and Holderness said, putting the whole thing into the deep freeze rather than simply damping it. In effect, a funding reform designed to move things in a fairer direction has been so watered down as to make the problem worse. That cannot be allowed to happen when it comes to school funding, and it should not be allowed to happen to the wider CLG funding for local authorities.

[Rory Stewart]

Would my hon. Friend touch, perhaps briefly, on health funding, which is one of the other great examples of this problem?

[Mr Walker]

My hon. Friend is absolutely right; it is exactly the problem I was about to move on to. As I mentioned earlier, health funding is another area of major concern. Rural areas tend to have higher numbers of elderly people and a higher life expectancy than the major cities. As so much health funding is allocated according to life expectancy and targeted towards areas of high perceived deprivation, it means that the population of big cities is generally much better funded than that of rural areas.

With an ageing population and more people living with long-term conditions that require regular treatment, this creates enormous pressure on all rural health services, particularly on community health services. Worcestershire as a whole gets lower health funding per person than do more urban areas of the west midlands, but it has an older population, placing greater demands on our health service. Shifting the balance of health funding from mortality to morbidity would help to address this, as would having a more activity-based formula for community health. In health as in education, however, the local structures do not exist in isolation from local government. There are close links between the health and the social care systems, while pressures on both the acute and the community health systems create additional pressure on local authority-run social care. The fact that we are underfunded for health means that our underfunding for social care is a more serious challenge for our local authority.

[Mr Graham Stuart]

If there is an injustice that is greater than in education or local government, it is an injustice in health. Is my hon. Friend aware of the work of Professor Sheena Asthana, who looked at Mid Staffs and other hospitals with high mortality rates and saw a correlation between the hospitals with high mortality rates and the populations they serve, which are typically older, rural and funded on an inequitable basis?

[Mr Walker]

I am grateful to my hon. Friend for making that point, which clearly illustrates the problems we face.

I hope that I have shown that the problems of local government funding do not exist in isolation. The Government should strive to provide fairer funding, not just through the CLG budget but through health, education and no doubt many other budgets. We need to make sure that corrections and changes to formulae are delivered swiftly so as to correct the long-standing problems and not water them down so as to make those problems worse.

What else could we do to improve the situation? Our councils, whether they be city councils such as Worcester or great county councils, did not grow up as organs of central government. As my noble Friend Lord Heseltine pointed out in his “No stone unturned” review, the great cities of England were not grown through the diktat of Westminster or the spending of Whitehall. The councils that directed their growth and success raised their own funds locally, invested locally and built up services according to the demands of their own local constituents. We need to rebuild some of that independence and self-reliance. Although there was a great deal with which I disagreed in the speech of the hon. Member for Sheffield South East (Mr Betts), who chairs the Communities and Local Government Select Committee, this is one area on which I think we can agree.

This cannot be done overnight, and there would be significant risks in allowing some areas to raise taxes much higher than others, but it should be a stated aim of the Government to provide councils with more of their own resources over time and to give them greater opportunities to raise local funding. Such has been the growth in responsibilities of local government over the decades that there is little chance of it ever returning to being entirely self-funded, but there is a role for Westminster in re-allocating funding from the richest areas of the country to the more needy, including rural areas. Increasing the proportion of local government funding that is in the control of councils will give them greater flexibility to manage the challenges they face and to deliver localism.

Early policies of the coalition, such as the new homes bonus and the delegation of powers over business rates relief, showed some promise. As Lord Heseltine suggested, the creation of a challenge fund, or single funding pot, also offers some prospect of more locally driven projects. However, I fear that there is a conflict between the desire to empower local enterprise partnerships and enable them to bid for local funding, and the demands of our councils. I urge the Minister to give careful consideration to what has been said about the reallocation of money from planning authorities to LEPS under the new homes bonus scheme.

I believe that in the case of funding for local authorities, as in those of education and health, our Government can do more to ensure that money is allocated fairly. I commend and support the campaign of my hon. Friend the Member for Beverley and Holderness for a rural fair share, and I remind the Government that fairer funding for rural areas affects not just rural constituencies, but county towns such as the one that I am proud to represent.