Local Government Finance

Sarah Newton Excerpts

Wednesday 12th February 2014 Commons Chamber

[Mr Cox]

My hon. Friend’s intervention enables me to say that the problem with the Bellwin formula is that it does not cover repair and is for a limited period. Repairs in the south-west, and particularly in Devon, are now up to a backlog of £750 million. I urge my hon. Friend the Minister to look again at the Bellwin formula to consider whether it properly takes account of the costs that large rural shires are facing after this hugely problematic and severe weather.

[Sarah Newton (Truro and Falmouth) (Con)]

Does my hon. and learned Friend agree that this point is absolutely essential, because the Prime Minister, in his visit to Devon and Cornwall, made it clear that councils would be compensated for all the costs of clearing up after the storm? Confusion will creep in unless this is dealt with in the way that my hon. and learned Friend describes.

[Mr Cox]

I agree with my hon. Friend and I hope that my hon. Friend the Minister will consider that. The changes that have been announced recently are very welcome but they do not go far enough, particularly for large counties, such as Devon and Cornwall, that have huge road networks, many of which have a backlog of repairs that is being made massively worse by the current spate of bad weather. We are facing huge backlogs of repair and maintenance. The current formula does not go far enough to address those problems. The Prime Minister has made this solemn pledge and I hope, and am sure, that my hon. Friend the Minister will want to see that that is properly fulfilled.

In conclusion, I urge my hon. Friend the Minister to heed this point; the problem relating to the anomaly of small rural councils and county councils—shire councils—will not go away. Torridge and West Devon are facing an existential threat from the cuts that they have faced. In West Devon and in Torridge they have cut, cut and cut again. They have gone far beyond the 40 ways that were announced some time ago. I urge my hon. Friend to address that problem and the rural anomalies.

--- Later in debate ---

[Stephen Gilbert]

Of course I do, Mr Deputy Speaker.

I have found this an invidious and divisive debate. It pits rural areas against urban, towns against cities, and north against south. Hon. Members from all sides of the House want to make the best representations for their local communities and get a fair deal for their local areas, but as my hon. Friends have demonstrated, particularly with Cornwall and Devon, this debate pits rural against urban communities. I hope that the Minister can see across the House, across the parties and across the rural-urban divide a desire to consider fundamentally how we reform local government finance in the future, whether that involves my hon. Friends the Members for Beverley and Holderness (Mr Stuart) and for North Devon (Sir Nick Harvey), or the Chair of the Communities and Local Government Committee who is from Sheffield. There is a clear desire to consider properly and fundamentally how we as a national Government grant resources to local councils. At the moment we have this annual theatre in which Members from across the House pop up and defend their individual parts of the country, but without a settled consensus on how the debate goes forward.

I want to speak not about the size of the local government settlement—I recognise, as I am sure my hon. Friend the Minister does, that the economic situation bequeathed to the coalition Government by the Labour party makes an increase in spending very difficult—but about the balance between rural and urban areas. As my hon. Friend the Member for North Devon so eloquently put on the record, urban areas have historically received 50% more per capita funding than rural areas, despite the fact that in rural areas such as Cornwall people on average pay higher council tax, earn lower wages and have higher housing costs as a proportion of their income. Local authorities, whether in Cornwall, Torridge and West Devon or North Devon, face difficulties in delivering services across rural and sparsely populated areas.

The Government have recognised this. In the spending settlement for 2013-14, they suggested that £200 million would be made available to increase the ability of rural authorities to meet those challenging circumstances. What happened, however, was that three quarters of that gain was damped so that the authorities losing out—the urban authorities, pretty much—did not suffer a sudden fall in funding. What we did not expect, and what nobody expected at that point, was that the Government would suspend moving the remaining three quarters of that gain until at least 2020, kicking the argument into the long grass and further delaying a fair settlement for authorities such as Cornwall.

What we have seen today in the Government’s increase in the ESSSA, or efficiency support for services in sparse areas, grant is welcome, but it is really just an additional £2 million on top of a paltry £9 million. If that £11 million is divided across the 95 most rural local authorities, they will have barely enough money to employ a full-time officer to work out the differential between what they should be receiving as a rural area and what they are getting. I suggest to my hon. Friend the Minister that while it is welcome—it would be churlish to look a gift horse in the mouth, as it will make a difference—it is woefully insufficient to start to close the divide between rural and urban funding that so bedevils parts of the country such as Cornwall.

[Sarah Newton]

My hon. Friend is making a powerful case and I agree with everything he says about Cornwall. Will he reflect on what we have learnt this evening from my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) and perhaps take up those arguments with the urban Members of his own party, so there can be a proper way forward?

[Stephen Gilbert]

I am grateful to my hon. Friend. She makes the point that I started with: this is a very divisive debate, pitting colleagues within parties on all sides of the House against each other. It pits towns against the countryside and city councils against district councils. That speaks to the fundamental need for overall reform and cross-party consensus on how we deliver local government funding in a way that meets needs on the ground and is equitable across the country, because it ain’t doing that at the moment. I have joined a number of colleagues on the Government Benches in presenting arguments to the Government to the effect that the rural-urban divide needs to be eradicated over time.