Local Government Funding: Rural Areas

Debate between Steve Reed and James Heappey

Monday 11th January 2016 Commons Chamber

[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.