Local Government Funding: Rural Areas

Debate between Simon Hoare and Andrew Bridgen

Monday 11th January 2016 Commons Chamber

[Simon Hoare]

My hon. Friend is right. He amplifies a golden thread that has run through the debate.

I have two further points that I urge the Government seriously to reconsider. The Care Act 2014 implementation grant has hitherto always been free-standing of the RSG—a little bit of icing on the cake. The proposed settlement rolls it into the RSG, and that seems rather unfair. I am happy to stand corrected by the Minister, but it is certainly the collective view across local government in my county that, in essence, the strategy that the Department is setting out has a counter-Conservative mindset whereby every single year council tax will have to increase by below whatever the capping figure is prevailing at the time, so arguably 1.99% today, and that the ring-fenced and extremely welcome—we are grateful to the Chancellor—2% hypothecation for social care will have to be year on year. I urge the Minister to unravel the knitting that the Department has done in meshing the grant with the RSG.

On the implied and presumed increase in council tax, the insult is compounded still more by the situation, as we understand it, on business rates. We cheered my right hon. Friend the Chancellor to the rafters in Manchester just a few short months ago when he gave ground on the localisation of business rates, which local government had been campaigning on for many a long year. I hope that the Minister will be able to clarify this, but our understanding is that while we will be allowed to set it and will continue to collect it, the centre will determine how much of it we retain and top-slice or cream off that which it believes we do not need in order to underpin and subsidise other, less efficient, authorities. That is, in itself, an insult, but when we add the factored-in, year-on-year increase in council tax of at least 3.99%, things start to get very tricky.

As my late and noble Friend Baroness Thatcher would have said to those three points, taking off her glasses with a sweep, I too have to say to the Minister, “No, no, no.” The increase of the rural services delivery grant to £65 million is welcome but way south of the £130 million that the network believes is required. It might just about make a fig leaf for a dormouse but will not add up to anywhere near what is required to service rural local government.

I have some questions for the Minister, for whom I have personal liking and huge respect. I do not envy him his position as he sits like Daniel in the lions’ den with the lions not having been fed for many a long month. The questions boil down to this: where is the equity in this proposal?

[Andrew Bridgen]

My hon. Friend is making an impassioned speech. The people of Leicestershire roared at the prospect of business rate retention, and the settlement for Leicestershire suggested full retention by 2020. The combined Government grant for local and county councils in Leicestershire is £136 million a year, and our current business rates are £226 million a year—a difference of some £90 million a year. I would be interested to hear from the Minister how soon we will be able retain those extra funds, especially given that North West Leicestershire has Coalville, which is the most deprived town in Leicestershire. North West Leicestershire is vibrant and has high economic growth. We have produced 23% of all the county’s business rates and we need those funds for the regeneration of Coalville. If that does not happen, we will be very disappointed indeed.

[Simon Hoare]

My hon. Friend makes a valid point and he can speak about Coalville with more detailed knowledge than I can. The underlying point is that there seems to be an incorrect assumption that Tory taxes in Tory shires will have to go up in order for Tory business rates in Tory areas to be relocated to other areas. That is a kick in the teeth and I fail to grasp the logic.

Why is the sparsity grant being back-loaded rather than front-loaded? The money is needed now. We are a two-tier county and the figures for Dorset County Council alone show that it loses 43.3%. The planned reduction was 30%, so it is not as if we did not expect some reductions, but 43.3% seems particularly high. I met district council leaders on Friday and they said that they are being led inexorably to the view that Her Majesty’s Government must have a vision for the reorganisation of English local government, but they have not quite worked out what it is yet, and that they are starving them into a form of submission.

Importantly, I welcome the fact that, for the second year running, the Government have delivered the £5 de minimis increase in council tax under the capping regime. If North Dorset takes advantage of that, it will give us an extra £160,000 a year. If we go with 2%, it would give us only £60,000 a year. I invite the Minister to give serious consideration to embedding the de minimis approach in future thinking.

Could we also end the cat and mouse game—it takes place every year—of, “Will they or won’t they cap the town and parish councils”? It is like baiting the lower tiers of local government. Blandford Forum Town Council in particular has made that plea to me. It wants to step into the breach, as evidenced by the 50 grand it is stumping up to help run the local leisure centre. It wants to help fill the vacuum, but at every step and turn it, too, feels constrained, because it does not know from one year to the next whether it will be capped.

North Dorset District Council’s Conservative leader, Deborah Croney, and its chief executive, Matt Prosser, have asked me whether the Minister will consider giving local control over matters such as local planning fees. At present, the council subsidises its planning function with some £600,000 a year, because of the complexity of planning and the very small fees it is able to set.