Local Government Finance

Sarah Dyke Excerpts

Wednesday 7th February 2024 Commons Chamber

[Chris Loder (West Dorset) (Con)]

It is a pleasure to contribute to this debate, which for me is the highlight of the parliamentary calendar. Relentlessly, year after year, I have contributed to the debate with great fondness. Last year, I remember vividly the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend and next-door neighbour the Member for North Dorset (Simon Hoare), advocating, from the Back Benches, for a great rural tsar. Of course, nowadays we have the great rural tsar sat on the Front Bench; I am pleased about that. I am also pleased that the debate has three hours of protected time, which is valuable. None the less, I will try not to take up too much time, Mr Deputy Speaker.

Each year, I stand up in this place to make the case not just for rural West Dorset, and Dorset as a whole, but rural Britain, in what I believe are some of our most important discussions and decisions about enabling the capability of local government. Most years, I have stood here and protested that we in Dorset have been in need of our fair share of government finances; indeed, in many previous years, we have not received that. But today is not D-day. Today is S-day, because my hon. Friend and neighbour—knight in shining armour that he is—is charging over Bulbarrow hill and through the Chalke valleys to Dorset Council in Dorchester, to deliver a £4 million boost to its finances. That is to be greatly welcomed. My other neighbour, my hon. Friend the Member for South Dorset (Richard Drax), who cannot be with us as he is away on parliamentary business with the Defence Committee, has asked me to reflect his views, so that my hon. Friend the Minister understands full well that we very much appreciate this in Dorset, after many years of campaigning for a greater and fairer share.

However, it is important to note that we still need to address the fundamental structural issues that we face in local government funding. I recognise that that is a vast task, which will take considerable work. I hope that, in winding up, my hon. Friend the Minister can give not just me but a number of colleagues who are in their places real confidence that the Government intend to achieve that in relatively short order, and that we will ensure that a fairer share of taxpayers’ money is allocated to where it is required.

The £110 million through the rural services delivery grant is much welcomed. That funding of up to £3.2 million for some areas—including Dorset—is much better, but is that enough to deal with the issues we have to face? From discussions that I have had in the House before the debate, I have a real sense that it is not. The additional £1.5 billion for social care is enormously welcome. A third of the community that I represent in West Dorset is over 65, so it has additional social care requirements. Are we in Dorset really getting our fair share of £1.5 billion, given that we are talking about a few million pounds? That is a question for us to ask.

In the wider context of making the case for rural Britain, I remind my hon. Friend and neighbour the Minister, and the Minister for Housing, Planning and Building Safety, that we have had high-energy debates, it is fair to say, about local government finances with both of them. I would like to reiterate some of the unfairness that remains in the “urban versus rural financing” debate. Rural areas still receive some 59% less per head in settlement funding than their urban counterparts; in real terms, that is about £111. Rural residents will also pay on average 20% per head more in council tax than their urban counterparts—although we should probably take Somerset to one side in that assumption. Rural residents receive on average 13% less per head in social care support overall than residents of urban areas, which is very important when it comes to providing that care in constituencies such as mine and those of my hon. Friends.

West Dorset constituency, which I am proud to represent, has an enormous county boundary with the county of Somerset. Many of my constituents use services and facilities in Somerset, and vice versa. It is fair to say that over the past month, many of my constituents and people in Somerset have looked with absolute horror at how the proposed council tax increases will affect them. For the benefit of the House, I would like to clarify the extent of those increases in real terms. Those living Yeovil can expect a 90% increase in the town council precept, while those living in Taunton, the county town of Somerset, can expect a 200% increase. In real terms, that is an increase of between £109 and £277 per annum in the town council precept alone.

I am well aware of this matter because a Somerset councillor, a Liberal Democrat, works in my constituency and contributes frequently to the Liberal Democrat leaflets that are shared in West Dorset. I should say that he is the head of the Somerset Council audit committee, of all committees; I can confirm that his mantra is “raise taxes and cut services”, which is definitely what is happening in Somerset. In November 2022, the Somerset Liberal Democrats said that they needed an additional £35 million because of a financial difficulty that they had experienced. There was no reporting of any finances to the council for five months, and then, all of a sudden, out of nowhere, came a black hole of £100 million.

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

I am a proud serving Somerset councillor and am fully aware of the issues Somerset is facing. However, those issues have occurred not just over the last nine months, under the new Somerset Council; they have been very long drawn out. Indeed, between 2010 and 2016, Somerset faced one of the longest council tax freezes—I think it was the longest for any council across the country—under the last Conservative administration, which led to huge pressures on funding in Somerset. Indeed, under Conservative administration, the council was nearly drawn into bankruptcy in 2019 due to pressures on adult social care. Would the hon. Member agree that the issue is not a party political stance, as he is trying to make it, but the legacy left by a previous Tory administration? The issues that we face in local government go across all colours.

[Chris Loder]

I thank the hon. Lady very much for her intervention. She and I are frequently in Westminster Hall debating these matters with great passion and vigour. I know that she feels as strongly as I do about these matters, but it will probably come as no surprise to her to hear that I do not agree with her conclusion. Previous Conservative administrations who ran Somerset Council left a considerable legacy in terms of reserves. Since the Liberal Democrat Council was elected and started serving last year, a number of decisions have been made across the board that have ended up in the lap of council tax payers in Somerset.I am alarmed about that, because ahead of the Dorset local elections, a number of constituents in West Dorset look with great horror at what is happening in Somerset, and wonder what is truly the case.

[Sarah Dyke]

rose—

[Chris Loder]

I have not quite finished replying to the hon. Lady’s previous intervention. I would like further to put into context the contrast between the finances of Somerset and Dorset. Last year, we in Dorset received just £700,000 in revenue support grants; Somerset received £8 million. Our social care grant last year was £22 million; in Somerset, it was £39 million. The high needs block funding was just £48 million for Dorset; it was £74 million for Somerset. The schools block funding was £76 million for Dorset, but £122 million for Somerset. I could go on, but I will not. There is an enormous contrast, which has happened in relatively short order. That is what happens when the Liberal Democrats run the council in Somerset, compared with a long-standing and financially well-run Conservative council in Dorset.

[Sarah Dyke]

I thank the hon. Member for allowing me to intervene again. He is making some unfair points that need some context. As a Dorset Member, he will know that the council tax in Dorset is vastly higher. In the local government reform back in the 1970s, Somerset was left with most of the rural county, and following the 1991 council tax change most of the higher banding was taken into Bath and Avon. We have fewer properties in the higher banded rates, so the council does not generate as much in council tax. He says that that is an issue for the Liberal Democrats, but he should remember that we are delivering on a plan to change to a unitary council that was implemented by the Conservative Government against the will of people in Somerset. We have delivered more than half the £18.4 million of savings within nine months, when the full savings were expected to be delivered within three years. The Liberal Democrats in Somerset are delivering.

[Chris Loder]

The reality is that the Liberal Democrats are not delivering on the Conservative legacy. That is clear for all to see, especially those who live in Yeovil and Taunton. It will hurt people financially, as they will see hundreds of pounds extra on their council tax because of having a Liberal Democrat administration rather than a Conservative one.

My constituency neighbour, my hon. Friend the Member for North Dorset, is saving the people of Somerset from a further 10% council tax hike that the Liberal Democrats want to pile on them. I am very grateful to him, as are a number of colleagues who are not able to be here, for saying that the Liberal Democrats have to be held accountable. They have to find solutions and carry through on what was a very good proposal several years ago. I hope that the people of Somerset will benefit from his good work and, in the mid to longer term, the people of Dorset will benefit, too.

--- Later in debate ---

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

I was pleased to debate local government finances in Somerset with the hon. Member for West Dorset (Chris Loder) at the beginning of the debate, but it would have been better if some of his Somerset colleagues had been here to do that with me.

It is easy to criticise local government and burden it with blame, but let us face it: it is the perfect scapegoat to distract us from the real-terms cuts inflicted by this Tory Government. I am proud to be an active Somerset councillor, and have had the pleasure and honour of serving my local community both on Somerset Council and in this House. I know councillors of all colours are working hard in Somerset to deliver for their residents, but the funding system for local government is simply broken. I am desperately concerned for the future of local government; it needs major reform.

I have spoken on multiple occasions about the issues facing Somerset Council, because of the national problems facing all local government. The council had to declare a financial emergency just last year owing to a £100 million funding gap for 2024-25. The Government have offered a £5 million payment to try to plug the gap, but that is woefully inadequate. While the additional support through the financial settlement is welcome, it is simply not enough. I thank the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for North Dorset (Simon Hoare), for engaging with me and the council; that engagement has been very much appreciated across the county. However, unless the Government can provide substantially greater funds, this will not work.

[Richard Foord (Tiverton and Honiton) (LD)]

Will my hon. Friend give way?

[Sarah Dyke]

Of course.

[Mr Deputy Speaker (Sir Roger Gale)]

Order. The hon. Member for Tiverton and Honiton (Richard Foord) has been in the Chamber for about five minutes. I do not expect hon. Members to walk into the Chamber and seek to support colleagues through an intervention.

[Sarah Dyke]

We need fundamental change to the way we fund local government. Across the country, we have an ageing population; in Somerset specifically, it is forecast that the 75-plus age group will double over the next 25 years. The demands of adult social care are becoming more complex and the costs are rising. We can no longer fund such an important and expensive service through council tax based on house prices from more than 30 years ago.

The issue is particularly difficult in Somerset. Historically low council tax rates and a damaging six-year freeze under the previous Conservative administration have left the band D rates in Somerset almost £260 lower than in its contiguous neighbour, Dorset. The rurality of Somerset also poses specific challenges because it costs more to provide services in rural areas. The council just cannot make enough money locally to fund adult social care. When I spoke recently to the leaders of Somerset Council, they described the situation as grim. They have to explain to residents why they will be paying more in council tax but receiving less, as cuts to discretionary services are being considered.

This is a nationwide issue that requires a nationwide solution. Nine councils have essentially gone bust since 2018, and the recent report by the Levelling Up, Housing and Communities Committee portrayed the critical situation facing local government. I am thankful to the Committee for its report, which recommended urgent reform to the funding of local authorities. I know that many of my colleagues in local government share those concerns. Some think it is now impossible to solve the crisis in local government through local funding.

I want to take this opportunity to highlight what our future could look like if we fail to reform local government, provide both statutory and discretionary services and look after the communities that we hold dear. Our communities will be left with high streets full of boarded-up businesses as the outdated business rates system puts pressure on entrepreneurs without adequately funding councils. Our fields will be littered with household waste from fly-tipping as councils shut down recycling centres, our streets overflowing with rubbish from uncollected bins. Our town centres will be bereft of quality libraries, and our roads full of even more potholes. As councils struggle more year on year to fund adult and children’s social care, SEND and housing, those services will undoubtedly deteriorate. Much of what I have mentioned is already a reality for millions around the country—it is simply terrifying to think how much worse it could get.

Council leaders have told me that we need a long-term solution, but politics is a short-term game. The Government have been reluctant to approach this issue seriously with a long-term plan, as evidenced by their unwillingness to follow the recommendations of the Levelling Up, Housing and Communities Committee and to publish a 10-year plan to tackle the long-term funding of adult social care.

I conclude by calling for cross-party unity to work together to solve this issue, which we must do for our communities. I know that councillors of all colours want to continue to provide the best level of services for their residents, and that councils of all colours are aware of the specific challenges they face. We must ensure that councils are adequately funded in the long term so that essential reforms are realised.

[Chris Loder]

I thank the hon. Lady for giving way. I appreciate the point she makes and agree with much of what she says. I just wanted to briefly say—

[Mr Deputy Speaker (Sir Roger Gale)]

Are we saying that the hon. Lady had sat down?

[Sarah Dyke]

indicated assent.

[Mr Deputy Speaker]

In that case, you cannot possibly have an intervention. I call Peter Aldous.