Local Government Funding: Rural Areas

Steve Reed Excerpts

Monday 11th January 2016 Commons Chamber

[Mr Steve Reed (Croydon North) (Lab)]

I congratulate the hon. Member for Beverley and Holderness (Graham Stuart) on securing this important debate through the Backbench Business Committee. It is a critical topic. I look forward to hearing the Minister’s responses to the many excellent points that have been made across the House.

I represent Croydon North, which is perhaps not the most rural constituency, but at heart the debate is about fairness, and that is a matter that concerns us all, wherever we represent in the UK. The most unfair aspect of the Government’s spending review is how they have targeted the biggest cuts on the poorest areas. They have placed the greatest burden on those least able to bear it. Our rural communities are among those that have been the hardest hit.

There are real issues of poverty in rural areas. We have heard Members talking eloquently about those issues during the debate. Households in rural areas are more likely to be in fuel poverty than those in urban areas. People living in rural communities find it harder to access key services such as schools, hospitals and shops. As my hon. Friend the Member for Workington (Sue Hayman) said, often that is because of poor, limited public transport. Housing costs are spiralling out of many people’s reach, yet despite all that the Government’s latest spending plans do little to address the growing pressures on rural communities.

Social care has been referred to in the debate. It is a particular problem. The proportion of older people is higher in rural areas than in urban areas; I was impressed by the comments by the hon. Member for Thirsk and Malton (Kevin Hollinrake) in that respect. That means these communities will be hit the hardest by the £1 billion funding gap in social care that the Local Government Association, which is Tory led, estimates still remains. That is assuming that every council in the country levies the Chancellor’s 2% council tax precept, and that is not a foregone conclusion.

Families in rural areas spend almost £800 more than the national average on transport. Under the Conservatives, rail fares have gone up by almost 25%, yet complaints about train services are rising in all parts of the country. Services in rural areas are often unreliable, where they exist at all, and rolling stock is often out of date.

Fares have gone up by 27% since the Prime Minister first entered Downing Street, yet fewer than half of all small rural settlements have a regular bus service. Rural communities should be able and should have the power to regulate their own bus services, as London can, helping to ensure that the right services are available at the right fare.

Low pay is endemic in many rural communities. The gap between urban and rural wages has grown by £1,000 since 2010, yet the Government have abolished the Agricultural Wages Board. Research shows that, after London and Oxford, starter homes are least affordable in rural areas. Housing costs are soaring while the Government have allowed rural wages to decline. Now, to make things worse, the Government are forcing councils to sell off what little affordable social housing remains.

Cuts in funding have had detrimental effects on all sorts of services. We have seen youth services close in rural communities. Communities have been plunged into darkness when councils have been forced to switch off street lighting during the night. Neighbourhood policing has been decimated to such an extent that Her Majesty’s inspectorate of constabulary has reported that car crime has been all but decriminalised, and cuts in vocational training and further education mean that people are unable to develop the skills they need for taking up employment opportunities in rural communities.

[Graham Stuart]

The hon. Gentleman is making a powerful speech; it is incorrect in only one way. Earnings have not dropped in rural areas; they simply have not grown as fast as they have in urban areas, such has been the economic success of this Government. The case he is making illustrates the need to close the gap between urban and rural areas, whatever the Treasury sets as the overall budget. Is it now the Labour party’s official policy to reduce and close the gap in spending power between rural and urban areas?

[Mr Reed]

The hon. Gentleman is right to say that there is a decline in wages relative to the cost of living in those areas. The Labour party is looking for fair funding across the Government, and I will say more about that later if he will allow me.

Pulling all that together, we are seeing a toxic cocktail of rising fares for worsening public transport, inaccessible public services, demand for services rising faster than funding, fewer good job opportunities, falling wages and soaring housing costs. People are being priced out of living and working in rural areas.

[Mrs Sheryll Murray]

I think I am hearing the hon. Gentleman confirm that Labour would reverse the changes it made in the funding formula in the early 2000s. Am I correct?

[Mr Reed]

What the Labour party is seeking is fair funding so that all communities and all parts of the country can benefit.

[Simon Hoare]

These are simple questions that require a yes or no answer, and the hon. Gentleman cannot hide behind the obfuscation that he wants to see fair funding. Does he believe that the allocation of funding should be done on a fair and equitable basis? Does he believe that the gap between rural and urban authorities should be closed? Yes or no?

[Mr Reed]

I am afraid that I can insist on fair funding. I believe that when resources are available, they should follow need. Unfortunately, that is not what is happening under this Government. I spent a few happy days in the hon. Gentleman’s constituency over the new year—I spotted a marvellous picture of him on the notice board in Milton Abbas—but I understand that such areas are suffering because the Government have not managed to get this right.

Previously we have heard the Government talk about an alleged improved funding settlement for rural areas, and perhaps we will hear that again from the Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones) this evening. That is not what we have been hearing from his own Back Benchers today, however. The Government have been trying to play off poorer rural areas against poorer urban areas, but this cannot be a race to the bottom. This should be about helping communities in every part of the country to thrive.

[James Heappey]

Will the hon. Gentleman give way?

[Mr Reed]

I will not, if the hon. Gentleman will forgive me. I am supposed to take only 10 minutes for my contribution.

Despite a string of assurances from the Government, we still have no idea how they will ensure a fair share-out of funding once business rates are localised. They have failed to make any announcement on how an equalisation mechanism might work, despite promising that such an announcement would be made during the autumn statement. Rural authorities remain concerned that the localisation of business rates could work against them, depriving them of funding and allowing them to fall back in relation to non-rural areas.

[James Heappey]

I thank the shadow Minister for giving way. I understand from the Chair that there is no time limit, so he has time to take our interventions. I say this to him in the softest way, because tonight’s debate has been refreshingly non-partisan. Rural Britain is listening, and it is not clear that you are advocating a rebalancing to close the gap. My apologies, Madam Deputy Speaker—I have just committed a deadly sin! It is apparent to me that the shadow Minister is not committing to a rebalancing between urban and rural areas. I invite him one more time to commit to that, so that we can all be clear that that is Labour policy.

[Mr Reed]

I do not think either rural or urban Britain would welcome the hon. Gentleman’s implication that this should be a race to the bottom, with one part of the country competing against another. Resources should follow need, fair and simple. That is what will lie at the heart of a fair funding mechanism, which I hope the Minister or someone from the Government will be able to announce to us before very much longer.

The rural authorities that have the concerns I have expressed are right to be worried. Westminster City Council, which covers the major shopping centres in central London, collects 8% of all of England’s business rates income—that is more than Birmingham, Manchester, Sheffield, Liverpool and Bristol combined. Without a fair redistribution system, rural communities, like other communities in the country, will simply be left to sink. As my hon. Friend the Member for Workington (Sue Hayman) pointed out, many businesses in sparsely populated rural areas pay little or no business rates. The Government have failed to invest in the world-class broadband infrastructure that could and should be a catalyst for business growth in those areas. There is simply no capacity to replace funding that will be lost when the revenue support grant goes.

The Government like to talk about their commitment to devolution, but we know that that is not real from the fact that the Secretary of State who sponsored the Cities and Local Government Devolution Bill is also sponsoring the Housing and Planning Bill, which contains more than 30 measures taking power away from local communities and centralising it here in Whitehall. Rural communities are feeling the gap between reality and Government rhetoric the most. The biggest devolution deals have been agreed with city regions, leaving most county areas and rural areas to fall behind yet again. Those areas need to be a full part of the devolution agenda, too; they cannot just be a footnote to city deals.

Rural areas have had a raw deal for a long time; they have been cut out of funding, investment and new powers. I welcome this debate, in which some excellent and interesting points have been made by Members from all parts of the House, and I hope that this evening might mark a turning point in the Government’s neglect of rural Britain.