Rural Councils: Funding

Sarah Dyke Excerpts

Wednesday 29th November 2023 Westminster Hall

[Sarah Dyke (Somerton and Frome) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Latham. I congratulate the hon. Member for West Dorset (Chris Loder), my neighbour, on securing the debate.

I must first declare an interest as a proudly active Somerset councillor. My colleagues and I at Somerset Council and across local government know how difficult times are for councils right across the country. We must not forget the crucial role that local authorities play. They provide essential frontline services to the residents they serve. To do so, and to survive, they must have the necessary support from central Government. In 2018, when the Prime Minister was Under-Secretary of State for Local Government, he claimed to understand just how important local authorities were, so I have been disappointed that more support has not been forthcoming during his premiership to enable local authorities to deliver services to their communities.

Local authorities need to be able to provide first-rate social care for adults and children. The Conservative former leader of Somerset Council has regularly recognised that adult and children’s social care is broken. He has called for immediate investment by Government in social care. Somerset Council is facing a £100 million black hole in its budget, with a significant overspend in social care. The latest estimates show a £70 million increase in costs for 2024-25. The stark reality is that inaction now will cost lives.

The cost of providing services in rural areas, like the majority of Somerton and Frome, is more than in urban areas, yet rural residents will receive 13% less in spending per head on social care support. As a result of underfunding, rural councils are forced to increase council tax to its highest rate in order to balance their budgets. The system is grossly unfair, as we have heard. An increase of 1% in council tax in a largely rural county like Somerset would bring in only £3.4 million, whereas in Surrey, for example, the figure would be about £8 million.

It is clear that in Somerset the urgent pressures we are facing are in part the fault of the previous Conservative administration, which refused to raise council tax for six years between 2010 and 2017—the longest freeze of any council in the country. That irresponsible move saw a minimum shortfall of £24 million per year, and delivered a total cut to services of £150 million. In the same time, the Government cut council funding by 40% until 2020. Combined, those policies have left it impossible for the council to meet its statutory obligations for funding social care at a time of high inflation, which has forced cuts in services that local people rely on. Somerset Council is also ranked towards the bottom for the Government public health funding that it receives. That is not right, and it is not fair.

We are waiting for the 2024-25 local government finance settlement; I hope that it will be fairer for rural local authorities. As the hon. Member for West Dorset mentioned, the current local government funding formula, which has been largely unchanged since 2013-14, has left rural areas with huge losses, and 75% of the exemplified gains were lost to local authorities due to damping and other changes.

Local government has been waiting for the fair funding review for seven years since its announcement, with several years of delay. If it does not urgently address the issues that rural councils are facing, it is highly likely that many more authorities will go bust and end up issuing section 114 notices. That can and should be avoided, as there are no better bodies to run local services than the people who live in the area that they serve. I hope that the Minister, another neighbour of mine, is listening to the very stark cost of ignoring the bleak reality for local authorities and the communities they serve across the country.