Local Government Finance

Stephen Gilbert Excerpts

Wednesday 12th February 2014 Commons Chamber

[Brandon Lewis]

It is best to refer the hon. Gentleman to the answer I gave a few moments ago.

In response to the question about flooding asked by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), let me say that we are currently experiencing the wettest winter for 250 years, and that has an impact on local authorities’ finances. Many are working tirelessly for the safety of their communities. The Government have made it clear that they are committed to supporting them unequivocally. The severe flooding and storms have affected rural and urban, town and country alike from Great Yarmouth to Dawlish.

Sixty-two local authorities have thus far indicated that they will apply under the Bellwin scheme for financial assistance. The grant reimburses local authorities for the cost of their immediate actions to safeguard life and property. We have enhanced the terms of the Bellwin scheme in response to the most recent severe weather events. The floor has been lowered so that more councils can apply, which will be of particular benefit to the unitary and county authorities. We estimate that that could be worth an extra £15 million to those councils, and we will be paying 100% above the threshold as opposed to the previous 85%. For the longer term, I am committed, along with my colleagues across Whitehall, to undertake a review of the Bellwin scheme to assess what changes may be needed in the light of more frequent and challenging weather events. Members will no doubt already have noted that we have provided a £7 million severe weather recovery fund for those areas affected before and over Christmas.

We have also listened to the wider concerns—I note the comments that have been made in interventions already this afternoon—of colleagues in rural areas about the extra challenges their local authorities might face in achieving service delivery efficiencies. We are topping up the rural services delivery funding by an extra £3 million this year, including the extra £2 million announced today, so it is now worth £11.5 million, which is a further boost to the 95 authorities that will benefit this year.

[Stephen Gilbert (St Austell and Newquay) (LD)]

Does the Minister not recognise, however, that that is less than the cost of employing an officer to work out what the missing money between the rural and urban split would be? Three million quid divided by 95 local authorities is about 30 grand each.

[Brandon Lewis]

The difference between the urban and rural authorities is between 13% and 10% when it comes to spending power, depending on whether we are looking at the counties or the districts. We will be working with the Department for Environment, Food and Rural Affairs over the next few months to do some research on the difference in the cost of delivering services, which is raised regularly by Members from rural constituencies, and get to the bottom of the issue.

--- Later in debate ---

[Stephen Gilbert (St Austell and Newquay) (LD)]

May I start by saying that I do not speak for my party on these issues? My hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) does that. I find it discourteous to us as a party that the Chair routinely does not call the lead spokesperson from the Liberal Democrats at the appropriate point in these debates—that is a point for you, Mr Deputy Speaker, to take through.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman can call his speech over now if he wishes and we will bring on somebody else—I would be more than happy. I hope he is not questioning the Chair and the way that people have been called. It is for the Liberal Democrats to inform the Chair about who is speaking, and not us working off a list. I hope he wishes to withdraw his earlier remarks.

--- Later in debate ---

[Stephen Gilbert]

I will certainly withdraw those remarks, Mr Deputy Speaker, and I will pass to my colleagues your guidance on how we can resolve that issue going forward.

[Mr Deputy Speaker]

I will not enter into a debate with the hon. Gentleman, but if Liberal Democrat Members do not know that after all these years, I do not think there is any help for them. Does he want to get on with the debate, or should I call somebody else?

[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.

[Mr Graham Stuart]

Further to the intervention from my hon. Friend the Member for Truro and Falmouth (Sarah Newton), if it is the case that Members of the hon. Gentleman’s party are standing in the way of a fairer settlement for rural areas, it may be worth having a quiet word. I would certainly urge him to do so, if that is the blockage.

[Stephen Gilbert]

There is no suggestion that any one of my colleagues, as opposed to any one of my hon. Friend’s colleagues on his side of the coalition, is standing in the way of tackling this funding formula. Of course, one of his colleagues is the Secretary of State. I think both the hon. Gentleman and I know that the funding formula bequeathed to us by the Labour party is one that really put in place the disparity between rural and urban areas, and one that he and I and all our colleagues on the Government Benches are asking our right hon. Friends in the Treasury and in the Department for Communities and Local Government to address.

I have joined colleagues on this side of the House in presenting the case for a fairer funding formula for Cornwall to Government. I am disappointed, to say the least, that that case has not been heard today. On that basis, it would be wrong for me to support what I think is an inadequate settlement tonight, and I shall continue to work with colleagues from all parts of the House to try to find consensus on how we deliver local government funding that is fit for purpose.