Neil Parish, MP for Tiverton and Honiton, lead a backbench businss debate in the House of Commons on fairer funding for rural Local Authorities and called on the Minister for Local Government to consider the high cost of delivering public services in rural areas.

Neil Parish (Tiverton and Honiton) (Con): I beg to move,

That this House has considered funding for local authorities.

I thank the Chairman of the Backbench Business Committee and the Committee for allowing us good time to debate this serious subject.

In the summer of 2012, the Secretary of State for Communities and Local Government recognised the penalty for rural authorities—that is, that the formula for allocating funds to local authorities disadvantaged those in rural areas—and improved the sparsity weighting for the formula for the local government financial settlement for 2013-14. That was the good news for rural authorities, and the Government must be commended for recognising that historical inequality and for seeking to improve the funding formula for local authorities to take into account the higher costs associated with delivering public services in rural areas. I fully support the Government in their stated aim.

However, the Government seemed to have a little wobble. The damping model that the Department chose to minimise the swing in funding for councils wiped out all the gains from the improved formula for rural authorities, and as a result their total funding actually fell faster than that of urban local authorities. I am not seeking to steal money from urban authorities; I seek a fair deal for rural authorities as well.

The Department allocated a further £8.5 million to the most sparsely populated authorities after the rural fair share campaign. MPs pressed the Department and made our case. However, that is still only a one-off grant for 2013-14, and it distributes the £8.5 million to 95 local authorities in amounts ranging from £649,000 to £856,000. Is the Department considering ensuring that we have a little bit more money than that next year? In fact, I would like another £30 million at least. I probably cannot horse-trade too much, but it must be recognised that the rural authorities are not getting their fare share. Although welcome, the one-off grant makes no material change to funding disparities within the overall £22 billion settlement. That is a very big sum of money.

Ian Mearns (Gateshead) (Lab): I hope the hon. Gentleman accepts that there are significant regional variations in the impact of the cuts. It is not just urban or rural; in some regions, both urban and rural authorities are facing significant disproportionate cuts in relation to national averages. The north-east of England is facing cuts across the board of about 23% in the next two or three financial years.

Neil Parish: The hon. Gentleman is right, because what the Government seem to have done—dare I be so blunt as to say it—is to ensure that those that least need it get the most money, by which I mean the south-east of England. Coming from the west country, I would of course say that. Many of my colleagues from the south-east probably do not necessarily agree with me.

It looks as though we have already drawn blood.

Sir Peter Bottomley: It is not a question of drawing blood. I hope that at some stage someone will say how much support there is for the elderly on the south coast—say, in the Worthing district—compared with support for the elderly in the north-east or the south-west.

Neil Parish: My hon. Friend makes a good point, because I believe that will need to be recognised not only in local government funding but in health service funding. In my constituency the town of Axminster has a population profile that matches the one forecast for the country in 2035, meaning that there is a much more elderly population. In Seaton and Sidmouth and along that coastline, there is an increasingly elderly population.

Mr Jim Cunningham (Coventry South) (Lab): I congratulate the hon. Gentleman on securing the debate. Does he agree that the local government funding formula in general needs to be looked at, because there are different problems in different regions, and those require different answers? In Coventry, the local authority has lost £45 million over the last three years and is expected to find another £19 million next year. That is affecting jobs as well as services, so Coventry is down 15%—1.5% above the national average in relation to cuts and resources.

Neil Parish: I started my political life in both district and county council—this is going back to the ’80s—and the formula was just as complicated then. Under successive Governments we have made it even more complicated. I think, dare I say it, that it is all done because if the formula is made complicated enough, no one will understand it and those in government can do what they like. The Government spend a lot of time talking about the spending power of councils. It is not only about that spending power, but about how we get to that spending power and who pays for it. I shall discuss that issue later.

Urban councils are still receiving 50% more per head than local authorities in rural areas, despite the fact that residents in rural authorities, such as Devon county council, pay 15% more council tax, and many public expenses are more expensive to deliver in sparsely populated rural areas.

Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con): West Somerset, which my hon. Friend knows well, is the most sparsely populated part of England, with the smallest council. As he knows from his days in Somerset county council, we have never been able to catch up with the deficit, simply because the rurality of the area means that there is no way, with our ageing population—it is the same in Axminster—to do that. Perhaps we should look at the future size of these councils to see whether they could provide a joint service to make more efficient use of funding made available through the Government.

Neil Parish: I remember West Somerset well from my local government days. The problem is that it has a population of about 28,000 or 30,000, and if it is necessary to have a raft of chief officers to run a council, it becomes extremely expensive. We must come up with a system whereby some of the very small rural authorities can share their chief officers or combine them, because in this day and age it is difficult to deliver with very small authorities.

Andrew Bingham (High Peak) (Con): The Minister is aware of the work that was done by the Conservatives in High Peak borough council when I served on it. It shares a chief executive and a senior management team, and I am delighted that the Government have now recognised that and given the local authority some money as well.

Neil Parish: My hon. Friend makes a good point. A council in my constituency, East Devon, shares a chief executive with South Somerset. Even though it is a sort of coalition, because one is Liberal Democrat-controlled and the other is Conservative-controlled, it works at officer level. Even though adjacent councils may be of different political persuasions, they can share resources. If it is possible to share administrative resources and cut expenses, it is possible to deliver a far better up-front service. That is what local government finance is for—to give people services, not to be gobbled up in administration. I have believed that all my political life.

More importantly, the local government settlement for 2014-15 is being frozen until 2020. As a result, the current disparity in funding between urban and rural local authorities will be entrenched, locking in past inequalities. The Government set up the review to settle that disparity, but we now have a damping and a freezing—back to square one for another five years. What is the Minister going to do about it, and how are we going to settle this so that we can transfer funds and have a fair deal?

Daniel Kawczynski (Shrewsbury and Atcham) (Con): I pay tribute to my hon. Friend for securing this important debate. He and I both represent very rural constituencies. Does he agree that it is important for the Government to explain to us what work they are doing to fully assess and understand the sheer cost of providing services in rural areas in comparison with inner-city areas, and the impact of that on our constituents?

Neil Parish: I know that my hon. Friend represents his rural constituency in Shropshire very well, and he realises that sparsity of population, distances, small schools and so on make services much more expensive to deliver. The irony of his question is that the Government have already done that work. They have already investigated the situation and come up with a policy to transfer those funds. That is what is so frustrating; they will not carry on with the process. That is why I am particularly keen to get them to look at that again and continue the great work that they have already done. That is all I ask. I am not asking for a new wheel; I am just asking for the present wheel to be rolled a bit further.

Graeme Morrice (Livingston) (Lab): The hon. Gentleman is making some sensible and considered points, but does he agree that the unfairness in the system—I know the grant system is incredibly complicated—is exacerbated by the existing plan to top-slice and hold back grant, such as the new homes bonus? That simply amplifies the problems for areas that are already disadvantaged, such as many of the local authorities in my region, including Durham county council and Gateshead metropolitan borough council.

Neil Parish: I do not necessarily want to get into a debate on how the new finance will be handled. Retaining the business rates and the new homes bonus are all part

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of it. A system where it is shared more equally across all authorities in the future may be one answer, but I do not want to argue with all the Government’s policies. I just want them to carry on with the very sensible policies that they had.

We are not asking for a change in the Government deficit reduction strategy. We support the Government in taking tough decisions to tackle the budget deficit inherited from the previous Administration. A quarter of all public expenditure is accounted for by the councils so this must be addressed. In response to my hon. Friend the Member for Beckenham, whom I unfortunately invited to intervene, there is some discrepancy in the figures for central London and those for outer London boroughs. The problem with local government formulae is how we invent a system that is fair to all.

Anne Marie Morris (Newton Abbot) (Con): Will my hon. Friend give way?

Neil Parish: Yes, I will.

Anne Marie Morris: Does my hon. Friend agree that there is an issue in relation to the definition of “rural”? My understanding is that the Department for Environment, Food and Rural Affairs uses the rural-50 or the rural-80, whereas in this case the “shire” word has been used, which will inevitably skew the results?

Neil Parish: My hon. Friend, who asked to intervene, is right. There is a different definition in DEFRA from the one used in local government, which does not seem to recognise councils that have a large rural population and larger rural parts of their areas. Why is it that the Department for Communities and Local Government does not recognise the DEFRA definition and may come up with another one? Is it to complicate the grant system still further? It would be cynical, would it not, to suggest such a thing.

We are here to press the Secretary of State to make good on the long-standing promise to correct the historic imbalance and give rural local authorities their fair share of central Government funding, in line with the summer consultation. We call on the Government to reduce the urban funding advantage over rural areas incrementally, year on year, to no more than 40% by 2020. Closing the gap between urban and rural can be achieved within the existing resources, within the period to 2020, without placing any individual authority in a worse position than others, and it is one of the recommendations to be made to the Government by the Environment, Food and Rural Affairs Committee, of which I am a member, in its report on our inquiry into rural communities.

By reducing urban funding by an extra 0.1% per year of the £24 billion local government funding settlement, the Government can reallocate £30 million to rural authorities and reduce the funding gap from 50% to 40% by 2020. I know that this is a matter of concern across the House. I thank my hon. Friend the Member for North Devon (Sir Nick Harvey) and my hon. Friends representing Worcestershire for helping me to secure the debate today. I also thank my hon. Friend the Member for Beverley and Holderness (Mr Stuart), who chairs the rural fair share campaign—

Bob Stewart: He is here in spirit.

Neil Parish: Indeed. I thank my hon. Friend the Member for Beverley and Holderness for pursuing the issue with great vigour, for considering the issue with Ministers with such tenacity, and for helping to secure this debate, as well as for the support and information provided by the local authorities in Devon and across the country.

A quarter of England’s population live in rural communities. Providing services presents many challenges to local government. This is particularly true in rural Devon, where there are serious barriers to services, with nearly 56% of residents living in rural areas across the county and with the house price to earnings ratio well below the national average. Lower than average wages and higher house prices is a trend replicated in other rural local authorities.

Ian Mearns: Reflecting on the point that the hon. Gentleman has just made, I know that many people regarded the council tax and its implementation as a blessed relief in the aftermath of the poll tax in the early 1990s, but unfortunately property valuations have not been reviewed to any great extent since then. An eight-band taxation system might have seemed fair at the time, compared with what there was before, but it has meant an awful lot of people in poor value properties paying a much greater proportion of their income in local taxation.

Neil Parish: The hon. Gentleman makes a good point. However, the Government that he supported had 13 years to change that and chose not to. The problem with opening up the issue of council tax banding is that it is probably a very big can of worms. I understand why successive Governments have not gone there, but that does not necessarily mean that one day we will not have to do it.

One of the biggest obstacles to providing services to a dispersed rural population is the high cost of transport, which has a knock-on effect on nearly all other areas of local government responsibility, such as adult and social care services, refuse and recycling, and ground maintenance. In 2009, 42% of households in the most rural areas had regular bus services close by, compared with 96% of urban households. These rural bus links are often the only way for many residents, particularly pensioners, disabled people and the unemployed, to access public services. I think I am right in saying that some 20-odd per cent. of the population of Devon has to go to work on buses, and if there are no buses, it is very difficult for them to do so.

Mr Robin Walker (Worcester) (Con): My hon. Friend is making an excellent speech. Does he agree that that also has a massive affect on education and the cost of getting children to school in rural areas, which is not part of the education funding formula but is part of local authority funding?

Neil Parish: My hon. Friend makes a good point about the distances involved in getting children to school. Also, in rural areas we have many smaller schools, which are very good schools but are more expensive to run.

Despite the fact that rural areas have been underfunded, I would highlight the very good services that education authorities, schools and those across the piece have managed to deliver in very difficult circumstances. However, that does not mean that we should sit here and allow the Government not to give us a fair share. I want to put it on the record that I believe that we have very good services, despite the meagre amounts being spent on them.

Later on Neil Parish said...

Neil Parish:To put it in perspective, Devon county council currently spends over £10 million a year on statutory bus pass schemes, which is twice as much as it can afford to invest in the actual public bus services. I am delighted that the Government are sticking to their promise to maintain concessionary bus passes for pensioners, but

Devon county council will need to fund them. I am sure that the House will agree that bus passes will do nobody any good if there are no buses on which they can be used.

Public transport is also a challenge for local authorities in rural areas with large road networks to maintain. Devon has the largest road network in England, with nearly 8,000 miles. I believe that it has as many roads as Belgium. In 2010 the council had to repair around 200,000 potholes due to severe weather, and since July 2012 Devon has suffered significant flooding, which has done untold damage to the roads.

I will come now to the final part of my speech. The summer consultation showed rural areas gaining more than £30 million. Those gains will be lost because of the chosen damping mechanism, which will actually increase the funding gap between urban and rural areas, the formula grant for rural authorities having fallen between 1.7% and 2.3% more than that for urban authorities. We are not asking Ministers to reinvent the wheel; we are asking them just to knock the corners off and make it round again. We believe that the Government got it right the first time in the summer of 2012 and that the damping model used has prevented that policy from working. I have met the Minister for Local Government and discussed the matter with him. He has been very fair to us, but I want him now to deliver on fairer funding for rural authorities.

Neil Parish then summed up the debate at the end...

Neil Parish: I have two minutes in which to make some telling comments.

I thank the 14 Members who have taken part in this powerful debate. I welcome the Minister’s remarks, but I go back to my original argument. In 2012, the Government looked at shifting money across to rural authorities. After that they damped it, then they gave us back

£8 million and now they say that they cannot even find £30 million. If it was right to do it in 2012, it is right to do it now. I ask the Minister to look at the matter again, because we will mobilise the rural yeomanry to ensure that we get our fair share of funding. We are asking for one tenth of 1% of the total budget to be shifted towards rural authorities. Is that too much to ask of the Government? I do not think it is.

The hon. Member for North Devon (Sir Nick Harvey) made the point that council tax payers pay £130 more for their services in rural areas. We therefore demand better services. Devon is the 245th worst funded area for its schools. My hon. Friend the Member for Worcester (Mr Walker) is running a great campaign on that issue.

We cannot just sit in the House and allow rural authorities and rural people to be treated in this way, so I tell the Minister that we will come to meet him again and will be looking for his cheque book. It is no good just having warm words, because we can put them nowhere. What we actually want is help—as my grandmother used to say, an ounce of help is better than a ton of pity. We want some help, not just warm words, so we look forward to a real solution.

Hansard source (Citation: HC Deb, 10 October 2013, c349)