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Local Government Finance (Rural Authorities)

Volume 558: debated on Monday 11 February 2013

I beg to move,

That this House has considered the matter of the local government finance settlement for rural local authorities.

We have only a short time for this debate—just over an hour. We were expecting a three-hour debate, but unfortunately we have been squeezed by various statements during the day and a substantial debate on Europe. However, I am happy to take interventions and will try not to speak for too long.

One can tell by the number of Members in the Chamber that this is a very important debate—on the share of grant that rural authorities are receiving from Government —that we take extremely seriously. I very much welcome the meetings I have had with the Minister and the sympathy he has shown. What we want to do this evening is take away not just sympathy but a little money, which is a little easier to put in our pockets.

The Department for Communities and Local Government announced the local government financial settlement for 2013-14. It will reduce central Government support to councils while doing nothing to address the long-standing inequality in funding between rural and urban councils. We are not asking for a change in the Government deficit reduction strategy, as 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 councils and that must be addressed. Instead, we are here this evening, even at this late stage, to press the Secretary of State to revise the proposed settlement and make good on the long-standing promise to correct this historical imbalance and give rural local authorities their fair share of central Government funding, in line with the summer consultation.

Does my hon. Friend agree that the rural penalty, which sees 50% more per head going to urban councils than to rural councils, cannot be justified, even by increased levels of deprivation in the urban areas? The additional cost of delivery in rural areas and of need in rural areas means that there is a demand across the country for a fairer settlement.

I thank my hon. Friend for his intervention, because I was going to say how much I thank him for his support. He chairs the Rural Fair Share campaign, and I thank him for pursuing this issue with Ministers with such tenacity and for helping to secure this debate. I agree with him entirely that the current situation just is not fair. We are not here to rob urban authorities of their money, but we are saying clearly to the Government that there are inequalities and they must be put right.

Does the damping system not make the matter worse? It says to rural authorities, “You deserve more but we are not going to give it to you until at least 2020. We are going to give it to authorities that will kick up a fuss if we don’t give it to them.”

I shall go on to mention the damping, but it seems to have achieved the worst of all worlds. The funding issue was looked into, and the Government listened to rural authorities and said that they would move money across, but the so-called damping process has been added to the system and it seems to have made the settlement even worse than it would have been without it. That is where the Government must look again.

Order. May I just say to hon. Members that one or two of you wish to speak very high up on the list and I am bothered that people keep intervening? If you go down the list as a result, you will understand, because it is going to be four minutes each at this rate. Were you giving way, Mr Parish?

The hon. Member for Beverley and Holderness (Mr Stuart) mentioned the contrast between urban and rural areas, and the deprivation in urban areas. Does the hon. Gentleman agree that there is deprivation in rural areas, too?

I thank the hon. Gentleman for his intervention because that is precisely the point. Rural areas are often leafy and green, and it does not appear, on the face of it, that there is any deprivation there, but there is. In rural areas people often have lower wages and so even those who are working find it very difficult to pay high levels of council tax. He makes a good point.

My hon. Friend will be depressed to learn that I am confused already, because we are talking about rural areas and urban areas, yet I am not aware of any line on the map that distinguishes between the two. Could he, or could the Minister, explain precisely how the difference is defined?

My hon. Friend makes an interesting point, because one of the arguments is about how we define what a rural authority is. Under the Department for Environment, Food and Rural Affairs definition some rural authorities are 80% rural and some are 50% rural, whereas the DCLG has one overall view: it has added everybody together and called them rural authorities. That is one of the problems we are facing.

I congratulate my hon. Friend on the timing of this debate, as most councils are setting their council tax at the moment. Does he agree that it costs more to deliver public services in rural areas, because of the increasing cost of fuel in those areas?

My hon. Friend is absolutely right, and there should be rural weighting. We are talking not only about the distances between villages and hamlets, but the distances between schools and the number of small schools in rural areas that are the heart of the village. If the local schools were to be destroyed, the village itself could be destroyed, so there is an awful lot to play for here.

Does my hon. Friend agree that in rural areas there are often a lot of self-employed people who are reluctant to apply for benefits such as free school meals, which are sometimes a measure of deprivation? Rural areas therefore lose out in that way as well.

My hon. Friend raises an interesting point about how we define the rural population and how we define depravity— [Interruption.] Perhaps I should refer to those who are deprived, rather than to depravity. I still want to make a serious point, because there is a problem with how the statistics are compiled and how judgment is made on rural areas. We in rural areas are all supposed to be wealthy and are asked to pay a great deal more of overall local government spending in our council tax.

Does my hon. Friend agree that sometimes the rural authorities that have been the most careful—doing the right thing—are the most penalised? For example, Devon has saved £100 million in the past three years, yet its gross value added has declined over seven years and is now 78% of the UK average.

Again, one of my hon. Friends raises a good point, because this has been going on for a long time. It went on under the previous Government and, dare I say, probably went on slightly under the previous Conservative Government. In those days, I was in local government. Savings were made and we cut our cloth accordingly, but along came the Government saying, “You have been so careful with your spending that you can now cut it some more.” I wonder whether central Government recognise those authorities, such as Devon and others, that have spent money wisely and made savings, yet are asked to make further reductions. The Minister is extremely concerned to make this fair, but we need not only to talk about it, but to sort it out.

Let us consider, for instance, the amount raised in council tax. Rural authorities such as Mid Devon and East Devon, which I represent, will raise in council tax nearly twice as much as, say, a local authority such as Greenwich. Therefore, rural populations are not only not getting a fair share of grant, but have to fund much more of local government spending from council tax.

The Government spend a lot of time talking about the overall spending power of a council, but I would argue that it is how we get to that spending power that matters. If we are asking our local residents and council tax payers to provide much more of that spend via their council tax than those in urban authorities do, we in the countryside are being over-taxed and, dare I say, urban authorities are being slightly under-taxed. We were told last year that that would be put right.

Will my hon. Friend consider the fact that the higher council tax paid by many rural authorities is a reflection of the increased cost of service delivery? It is hardly likely to be due to inefficiencies.

Yes. My hon. Friend makes a good point, because there is an extra cost in delivering services in rural areas and rural authorities. However, whatever the cost of delivering a service, we cannot get away from the inequality in how much is given in Government grant to rural authorities compared to urban. I expected and still expect—I have great expectations of the Minister and of the coalition Government—the promise of equal shares for rural authorities to be delivered on.

The point is that we want fairness. We know that the pot had to be reduced, but we were promised that whatever the pot was, it would be more fairly handed out. Not only is that not happening, but it has now been put off until after the next general election.

My hon. Friend makes a good point. Back in 2004 we saw funding drift away from rural authorities towards urban authorities and we thought that now there would be a rebalancing, but that is not happening and, as he says, we will have to wait until almost 2020 before that is put right.

If we do not get this year’s settlement right, lower funding for rural authorities will follow in subsequent years. We will see many changes, especially in district councils, where business rates will be retained, but the amount that they are able to spend will still be controlled by central Government. That is why this year’s settlement is particularly important.

On that point, in my 15 years as a Member of Parliament I do not think I have seen such anger on the part of rural council leaders in Mid Suffolk district council. One of the most numerate of councillors I have ever met, Councillor Derrick Haley, who has cut services to the bone and been incredibly efficient and innovative, is incredibly angry. Has my hon. Friend picked up that sense of anger from very competent, diligent and loyal Conservative council leaders?

My hon. Friend is right. The position is the same in Devon, where the Devon county council leader made enough savings to get through the current budget and was going forward well, but his budget was cut yet again. That is the problem. Devon is reputed to have more roads than Belgium, for instance, which is why the cost of repair, particularly after the floods, is so large. [Interruption.] It is absolutely true. There are more roads in Devon than there are in Belgium.

Rural authorities have to deal with high fuel prices, and the cost of education in schools is much higher. Devon is the 244th lowest in the table for school funding. All these factors need to be taken into consideration by the Government so that we get a fair share. I have much more to say, but in order to give colleagues time to speak—

If my hon. Friend is drawing his remarks to a close, which would be a shame, may I urge him to address the issue that he promised to come on to, which was raised by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), about damping? It will mean that rural authorities will not see the gains to which they are entitled before 2020 and probably not at all.

Order. We have already used 14 minutes, and every time we carry on, we are going to lose some speakers. It is that serious.

I accept what you say, Mr Deputy Speaker, so I will bring my remarks to a close. I agree with my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice). We looked at moving funds in a more equal way towards rural authorities. I do not know who it frightened in the system, but it obviously frightened somebody. They came up with a damping process which, in my view, made matters worse. I know from speaking to the Minister that he is very keen to put things right. I shall be interested to hear what he says this evening about bringing back some of the funding that has been taken away by damping. That is what we are after tonight. We do not expect vast pots of new money, but we want to see our situation get better; instead, it just seems to get worse.

We look forward to hearing what the Minister has to say about directing a fair share of funding towards rural authorities and making sure that this settlement does not prolong the agony of poor settlements for rural authorities for many more years.

I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on introducing this debate and the hon. Member for Beverley and Holderness (Mr Stuart) on the good work that he has been doing in running the all-party group on rural services.

I want to make it absolutely clear that this is not just an issue for Government Members; Labour Members are also concerned about it.

I am sure that my hon. Friend agrees that this is not a party political issue. Cumbria county council is controlled by Labour and Conservative councillors, and they think that the situation is unfair.

Precisely—it is unfair. There is a lot of deprivation in rural areas, many of which in my constituency are former mining areas and old mining villages where the levels of deprivation are among the highest in the country. That is also true of Cumbria and in Derbyshire.

It is important to consider why service delivery is more expensive in the countryside. Distance issues that do not apply in urban areas mean that the costs of delivering village schools, school transport, health services, social care, transport to hospitals and ambulance services all shoot up.

In a two-tier authority, all the things the hon. Lady mentioned that cost more because of rurality would relate to a county council. Does she agree that there are also extra costs to rurality at the district level?

The hon. Gentleman is right. On roads, for example, in my constituency there is not only the cost of their upkeep but of dealing with the snow, and the bus network covers 900 sq km. He will immediately see that huge costs are falling on Durham county council.

We need to have more community centres and village halls—extra facilities to deal with the fact that people cannot be expected to travel all the time to reach their public services. Last month I had a particularly poignant example involving a training centre in a village that is needed because the bus fares are so high to get to the further education college in the main town. Unfortunately, because of the cuts in the local government settlement, Coundon and Leeholme community partnership found that the training centre was going to have to close. That is a terrible problem for the people in the village, who will not be able to afford the training that they need.

School transport is also a significant problem. It is absurd for children to be walking 3 miles to and from school every day, as is possible under the law at the moment. Such laws were instituted in the days when there was not a lot of traffic on the roads as there is now. We really need to pay attention to these special rural issues.

I want to say a couple of things about the system. The summer consultation showed that rural areas were gaining more than £30 million, but those gains were lost because of damping, as the hon. Member for Tiverton and Honiton said. A one-off grant of £8.5 million has been provided to some authorities for 2013-14, but there is apparently no plan to continue with the grant beyond that period. It would be helpful if the Minister could tell us his plans for future years, because rural areas have lost proportionately more than urban areas. I want to raise with him a specific point about Durham.

Will the hon. Lady provide the House with the information that she suggests exists? The truth, as I am sure she will agree, is that as a result of the adjustment the reduction in spending for predominantly rural areas is less than the reduction in spending for other forms of authority.

Given that Durham county council faces a 40% cut over the spending period, I could not possibly agree with the right hon. Gentleman’s contention.

At the start of last week, the Government announced an extra £8.5 million for rural areas. A list was published on Monday by the Department for Communities and Local Government indicating that County Durham would benefit by £224,000. Later in the week a further, revised list was published in which Durham’s £224,000 had disappeared. The allocations for other areas had also been taken from the list. What is happening to Durham? Why were we on the list in the first place? Why are we not on the list now? What has the Minister done, not just with our county, but with others that have been moved off the list?

It is clear that rural fire authorities have suffered a larger fall in their grant than urban ones, even when their share of the £8.5 million is included. Rural council taxes are an average of £75 a head more than urban council taxes. That is because of the extra costs of delivering services in rural areas, not because rural authorities are less efficient. The result is that rural authorities will be at least £60 million worse off than they might reasonably have expected to be next year.

May I say, Mr Deputy Speaker, that the telling off you gave me was the nicest one I have ever had?

I want to give a practical view of where we are. West Somerset district council—my hon. Friend the Member for Tiverton and Honiton (Neil Parish) knows it well, but it will be better known to most colleagues as Exmoor—has 30,000 people in 260 square miles. It has a budget of just £5 million and is in severe financial difficulties. One of its problems, not just now, but over many years—this goes back a long time—is that it has battled against various Government cuts. It has now got to the stage where, unless severe decisions are made, it will no longer exist. It has had to sign a protocol with Taunton Deane council—the next-door borough council, which, I am glad to say, is Conservative—enabling it to be helped with both the budget and the taking over of resources.

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) has been to West Somerset to help, so he is well aware that the grant has been cut over many years. Although he has managed to find the council a bit more money this time around, it is only worth 1%, or £45,000. A 3.7% increase in rates is only about £40,000, given the low base.

My hon. Friend the Member for Thirsk and Malton (Miss McIntosh) made the point about the cost of living in rural areas. It shows in West Somerset. Unfortunately, if this situation continues, West Somerset will not be the only one. I can assure all colleagues that other district councils will be in the same position in a few years.

Does my hon. Friend agree that one of the significant problems is that the cost of delivering services in rural areas has simply not been reassessed for many years and that it is high time that that reassessment took place?

Order. The hon. Lady was at the very top of the list, but she has now dropped down. I did warn people what would happen.

My hon. Friend is absolutely right. She knows from her own constituency how difficult it is to live in rural areas where the cost of care, of the school run and of everything else is high. I know that she does a marvellous job for her constituency and that she will continue to do so.

Sedgemoor district council is at the other end of my constituency. It has a much more successful base, but it is still under enormous pressure because of the differential. It builds huge warehouses and does so much to bring in industry. It has been very successful, but it is still 20% behind. If we do not address this situation now, not only will a lot of councils opt out, but how will we get councillors? Why would somebody become a councillor in an organisation that may well disappear on their watch? It is just not going to happen. It is becoming more obvious that, unless a decision is made quickly, local government may not last until 2020. The decision has to be made in this financial year, or the next at the outside.

The two options are either to cut urban or put up rural. That is it—there is not a lot else we can do. The Minister has to decide which way we go. It will not be easy, because we do not have the money, but quite simply something must be done if we do not want all our district councils to disappear and turn into great unitary councils and if we are to keep the local democracy that so many people across Torridge and West Devon and so much of this House hold dear.

I plead for West Somerset council, because I think that it needs to survive. The Minister and everyone else have done their best, but the odds are still skewed against it. On that note, I will not detain the House any longer.

It is a pleasure to take part in this debate.

I chair the Rural Fair Share campaign with my hon. Friend the Member for North Cornwall (Dan Rogerson) and the hon. Member for Workington (Sir Tony Cunningham). The campaign has support across the House, as the hon. Member for Bishop Auckland (Helen Goodman) suggested in her powerful speech, which I hope Ministers listened to closely.

The hon. Member for Bishop Auckland highlighted the cost of delivering services. One does not need to be a public service economist to understand that point; one just needs to look at a map. If one adds to that the fact that rural areas have older populations than urban areas—populations that are ageing quickly—and the costs of domiciliary care, one can feel the immense pressure that there is on the system in rural areas.

As has been said, rural areas have been poorly funded for a long time compared with urban areas, despite the fact that the costs of delivery are often higher. Overall, rural residents earn less than people in urban areas, but pay council tax that is £75 per head higher. Therefore, rural people, having paid more out of a lower income base, have a level of spending power for services that is lower than that in urban areas. There is no evidential base for that fundamentally unfair situation. That is the point that I hope Ministers will take on board.

There is a rural penalty that sees urban areas get 50% more per head in central Government funding than rural areas. That position is indefensible. If it is not indefensible, we would like the Government, who must have done the analysis, to explain to us why it is just and reasonable for people in rural areas, many of whom are elderly and on low incomes, to be so unfairly treated.

I am grateful to my hon. Friend for giving way. I know that I am not on your list, Mr Deputy Speaker, but I want to challenge my hon. Friend because he has rightly referred to the Department’s statistics and comparisons. Over the past few weeks since this has become a topic of such serious concern, there has been a lot of dispute between Ministers and sparse rural local authorities. Will my hon. Friend spare a minute or even half a minute of his speech to explain what that difference of opinion is and why those of us who represent rural local authorities differ seriously from the Department?

I thank my right hon. Friend. I will explain the position. A year ago, a delegation went to see the Prime Minister to deal with this issue. In the summer, the Department consulted on a new way of looking at things that recognised the increased cost of sparsity in the formula. It came out with a figure that looked very promising in respect of reducing the 50% rural penalty. It then damped 75% of the gain away so that there was a 2 percentage point closing of the gap from a 50% rural penalty to one of merely 48%.

When the December settlement came out, our first analysis showed that that 2 percentage point gain had been wiped out. In fact, it had been entirely reversed and we were looking at a 2 percentage point increase in the rural penalty. We met the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who is responding to this debate—he has been most helpful in having meetings—but we struggled to get the position of the officials on the numbers that the Rural Services Network had come up with. It turned out that 500,000 people had been added to the population of London. When that information is put in, the 2 percentage point increase per head turns into a 0.2 percentage point narrowing.

The good news, which I can share with the House, is that the Government’s settlement takes a 50% rural penalty and reduces it by 0.2 percentage points to 49.8%. As I understand it, that is why technically the Government can claim that there has been a narrowing of the gap. It is pretty minuscule and nothing like the closing of the gap that we were talking about in the summer, which even then was derisory. Ministers are right, if they are doing so, to hold their heads in shame at that situation. [Interruption.] Was that too harsh?

I say to those on the Front Benches that Members participating in this debate come from across the House. We are looking for a fairer settlement and we hoped and expected that the Government would look at the issue on an evidential basis. We are not seeing that and it is not good enough. There will be a vote on Wednesday, and I hope that those on the Front Benches will consider carefully the speeches made this evening. All Government Members support the need for austerity and strict control of the spending envelope, and we do not argue for greater Government spending. We are saying, however, that at a time of limited resources, the allocation of those resources is more, not less, important. It may be politically more difficult and challenging and take some courage, but if less resource is around, we cannot afford to punish further those who have already put up with too much. That is our message to those on the Front Benches, and I sincerely hope they will listen.

My hon. Friends who preceded me have expressed with elegance and precision the real points, and I hope that Ministers on the Front Bench—it is good to see the Secretary of State in his place today—will discover deep down a will to remedy this issue. My hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) set out the problem for West Somerset, and said that other districts in similar positions will face precisely the same predicaments just a year or two down the line.

I represent one or two such districts—Torridge district council and West Devon borough council are small, highly rural councils both facing an existential threat from the proposals in this settlement. Although West Devon council’s needs assessment was raised by 60%, the effect of damping is to reduce the overall funding settlement by 2.5%. Over the next three years it must take out £1.4 million from a budget of £7.5 million. It has already saved £1.5 million over the past three years, and the five years before that it saved £2.5 million by sharing back-office services with South Hams district council. My question to my right hon. Friend the Secretary of State is: where is the council to find the money?

West Devon council scrutinised with anxious care the “50 ways to save” document published by the Department which is, if I may say so, a practical manual full of common sense. There is one problem, however, because it has already implemented 47 of the 50 measures. Only three are left and they might have a marginal and peripheral effect. That is why West Devon council—which I use as a case study only— is facing over the next three years the need to take £1.4 million from a budget of £7.5 million. It has no serious revenue asset base; its council tax is already at a high level and it has been obliged to disobey the strictures of the Secretary of State by failing to freeze council tax.

Since the Secretary of State is present, let me say that I appreciate his robust style. Government Members love him; we think he is an asset to the Conservative party and to the Government. However, I plead with him: could he temper his language just a little? There are hundreds of good Conservative councillors up and down the length and breadth of the country who from time to time listen to his words and misunderstand. We know he does not mean it; we know it is just a joke. We know he is only teasing and that he is doing it in a loving way. The truth is, however, that those Conservative councillors—and other councillors—need to be loved and not always criticised. They are facing precisely the problem that my hon. Friend the Member for Bridgwater and West Somerset so eloquently set out, and a situation that is simply untenable over the next three or four years.

It is no good producing £8.5 million from the back of the sofa for this year only; they will have to produce it over the next few years as well. I say to Ministers on the Front Bench that we cannot go on fudging and dodging the issue. These small district and borough councils are facing a serious threat, and I urge Ministers to take it as seriously as it deserves.

I shall be brief. My constituency has four principal authorities, with a mix of urban and rural that makes life quite difficult. In any event, I see clearly the concerns of Purbeck district council, part of which lies in my constituency. It is obvious that rural councils will be subject to extra costs when delivering services, but the question is, “How much extra cost?”

I would like to make a plea for some work to be done on this question. Presumably, there was some work done on it, because originally the local government settlement was looking most promising, with some consideration given to increasing funding in relation to sparsity, which was excellent. But then along came damping, followed by the £8.5 million grant, which is positive, but for one year only. I want some transparency. What is the deficit? If we knew that, and we could all see what the position was, people would feel happier. Hearing about 1% and 2%, or that rural councils are really better off, is confusing. Why cannot we have a clear, pat answer —the position is this, because of that. I do not see that that should be beyond the bounds of possibility.

While the average awarded in Government grant per head of population last year was £487, or £324 for rural areas, Purbeck received only £215 per head. Average council tax in England is £398, but in Purbeck it is £594. Everything is exaggerated as we go through the figures. The pre-damping figure for Purbeck was £295,000, but post-damping it is £121,000. Surprise, surprise, when we get the share of the £8.5 million grant, it is a mere £6,879 for Purbeck, which will not give a great deal of scope for finding more efficiencies, if indeed there is any more to do.

We have a problem. We have reduced local government expenditure and they have implemented so many cuts. We have the battle between the councils, but we can only be sure that we are getting the best deal for our residents if we have total transparency and figures provided to us that actually explain the situation rather than blurring it.

The stark contrast between rural and urban areas is clearly demonstrated in my constituency, part of which is drawn from the urban unitary area of Southampton and the rest from the rural area served by Test Valley borough council and Hampshire county council. They are good councils working hard to deliver top-quality services at the most economic cost. They are rightly proud of their combined record in that regard, but they face difficult challenges because of the very nature of the geography they must cover.

Hampshire is a county where town and country often meet, and where it is not unusual even within boroughs for there to be massive contrasts between the relatively highly populated urban centres and the vast rural areas where populations are much more spread out; where schools serve vast areas but comparatively fewer children; where refuse collection is much more challenging just because of the sheer miles to be covered; and where there are real problems in delivering adult social care because the distances for carers to travel between elderly residents in need of assistance are significant.

Those of us representing rural areas can point to examples, and what we see as the challenges, but the difficulty is that there is little hard evidence. Instinctively, we may feel and see differences between rural and urban, but research by the Department is desperately needed to assess the extent of the disparity. Rural councils cannot demand comparative evidence from their urban neighbours in order to make a proper comparison, but such a comparison is desperately needed.

In Hampshire, a population of 1.3 million is spread over 1,400 square miles—it is the largest county in the south-east of England. But its size brings about very real challenges. The 5,000 miles of road not only need to be maintained properly, at a cost of £60 million a year, including Operation Resilience, which completely resurfaces Hampshire’s roads, but—as we can see today—those same roads need to be gritted and snow-ploughed.

Of course, we cannot guarantee that residents will live in the most accessible parts of the county. We cannot be assured that schools will be easy to access. In Hampshire, there are 500 schools varying in size from just 50 pupils up to 1,800. In small villages in particular, delivering education presents a challenge and prevents councils from achieving economies of scale. In the Southampton part of my constituency, primary schools have an average number on roll of nearly 250, whereas in some of my village schools the figure is only 50. That is not to say that provision is any harder or easier; it is just different.

Councils that have to provide services such as education and transport have become expert at doing so. However, in many instances it is more and more of a struggle to cut their cloth sufficiently sparingly to go around. As I said earlier, it is important to have comparators and that a reassessment be done, so that when we stand in this Chamber and make the case for rural areas we can do so from a base of knowledge and evidence.

Today we have seen a welcome announcement in the House: a rise in the threshold for eligibility to social care to £123,000 and the improvement of having a total cap on care costs. However, this will have huge implications for local authorities, because it will bring many more people into statutory eligibility for care. This will not come into force for several years, but the settlements in place now will have long-term implications for the future, and great implications for rural areas and rural authorities such as Devon, the fifth-oldest of all the local authority areas in England. The implications will combine with the similar kind of arrangements that occur, for example, in health.

Increasingly, there is a trend towards prioritising funding to address health inequality, rather than focusing on health need. The older one is, the greater one’s care needs.

It is ageist. We need to consider what elderly people require. How can we justify the fact that older patients in inner-city authorities have three times the amount spent on their cancer care than those living in a rural authority? For any condition that we might want to consider—be it diabetes, arthritis or dementia— rural local authorities’ needs will be higher. How do we justify to our elderly constituents, or to a carer for someone with dementia, that they are entitled to less? Why do we rate the value of an elderly person with dementia so much less in a rural area such as Devon than we do in an inner-city area?

We have to consider health inequalities, but other parts of the budget are more appropriately considered as modifiable areas for change. However, many conditions are not modifiable as health inequality issues. Will the Minister say what can be done to address health and social care needs? It is not just about addressing need, but the cost of delivering care. It might take a care worker in Devon 40 minutes to travel between appointments, whereas distances and costs will be far less in inner-city areas. There is also the consideration of whether a care worker can be found at all in many rural areas. Will those on the Front Bench consider the challenge of rurality? To be deprived in a rural area is to be additionally deprived. I hope that Ministers will address that by distributing funding more equitably to rural areas.

There is the possibility that those on the Front Bench will have a weary cynicism about this debate—a feeling that statistics are being thrown around, that special pleading is going on, names of councils being showered down on them, and figures of 50% or 2% and different definitions and so on being mentioned, but the point, of course, that hon. Members are making on both sides of the House is not about councils, but about rural communities and the very particular situation in which rural communities in Britain find themselves after 50 years of intense fragility.

We are talking not about individuals, wealthy second-home owners or people who retire to the countryside, but about organic, living communities of the sort that we prize in this country and that everyone in the Chamber prizes—communities containing young families, living small farms and a living school. Those things desperately depend on how rural councils are funded, however, and they face a perfect storm. Ministers are not the only people putting pressures on them. It is important to understand the overall context in which agri-environmental schemes, the huge movement towards supermarkets and capitalism itself have eroded rural communities. This is simply the last straw on the camel’s back. For all the reasons we have heard in the House—sparse population, fuel poverty, cost of living—these communities now face a serious crisis. Whatever we do with the 50% or the 2%, rural councils have inherited a situation in which they are significantly less well funded per head than urban councils.

As my hon. Friend points out, this situation has been going on for a long time, so does he share my disappointment that, although we thought that this would finally be dealt with and that rural communities would get their fair share, that does not appear to be happening?

That is an excellent point. Perhaps Ministers will address the fact that this is an inherited situation, stretching back to the ’60s and the ’70s, and relating to the debts of urban councils and the types of assets that urban councils possess. The financial settlement was not designed to address real instances of deprivation or to take into account the indexes of deprivation that we all experience day to day—the cost of heating rural homes, the cost of living and so on.

The nub of the argument, however, has to be about the communities themselves—about why we care about them and wish to keep vibrant, living, organic communities alive. There are three reasons: first, there will come a time when we treasure the food security offered by those small farms, which do not exist independent of the funding that the council is prepared to provide for schools, transport or housing; secondly, tourism, which is one of the most rapidly growing sectors in the rural economy, is dependent not on our weather or food, but on a living landscape of humans; and finally, the fact that this is something deeply precious to Britain. In this the 21st century, our country has the privilege of being one of the most advanced developed countries in the world. We can set an example to other countries of how an advanced industrial economy should behave, what kind of civilisation and future we want and what kind of landscape we imagine for our grandchildren. The decision that Ministers make today will determine that: it will determine whether instead of a network of small farms, organic communities and vibrant villages, we end up with nothing but a wilderness for millionaires.

This has been a very interesting and important debate, and I start by congratulating the hon. Member for Tiverton and Honiton (Neil Parish) on leading it.

The Opposition would not support a drift of funding from deprived urban authorities in order to make up the shortfall in rural authorities, but that is not to say that the rural authorities do not have a important case —a case that has been eloquently put by hon. Members this evening.

The hon. Gentleman will know that that has been the situation over decades, as we have heard from other Members, but we are not talking about just an urban-rural split. Larger county councils in other parts of the country, such as the south-east, are demonstrably overfunded, whereas councils and authorities such as Cornwall are underfunded. This is not an urban-rural thing; it is about looking at where the need is and ensuring the money gets there.

The complexity of local government funding is certainly an issue, but when the hon. Gentleman refers to an historic problem, I remind him that in every year of the Labour Government, local government saw growth in its budgets. Only since the election of the Conservative-Liberal coalition have we seen a huge reduction in funding for local government. Of course we must argue for a fair share for rural authorities, but that should not be achieved at the expense of urban authorities.

Does my hon. Friend agree with the contention that the freeze only really helps authorities in the south-east with high house prices? Is he aware that of the 17 authorities with projected increases in spending power for 2014-15—the year after the £8.5 million one-off grant—no fewer than 14 are in the London commuter belt, while rural areas feature heavily among those facing the biggest reductions?

My hon. Friend draws attention to a real problem with the council tax freeze grant, as have Government Members this evening. Local authorities of every political persuasion have seen through the Secretary of State’s wheeze. For many local authorities, taking the grant would clearly create significant problems down the road. That is why we are seeing Conservative, Liberal Democrat and Labour authorities refusing to take the grant, for very good reasons.

We have heard contributions this evening from my hon. Friend the Member for Bishop Auckland (Helen Goodman), who we have just heard from again, and the hon. Member for Beverley and Holderness (Mr Stuart), who spoke passionately about the need for a fairer settlement—although, rather paradoxically, he also said he supported the Government’s austerity programme. It seems to me that he cannot have it both ways.

This is about the allocation and getting a fair share—hence the name of the Rural Fair Share campaign. We were going to have to control public expenditure whoever was in office; this is about recognising the need to look even more carefully to ensure a fair division based on need.

I hope the hon. Gentleman would agree, however, that it would be completely unfair to impose even deeper cuts on some of the most deprived local authorities in urban areas. The real issue is that the Secretary of State volunteered to accept unprecedented funding cuts—far higher than those for any other Department—in local government. The blame rests fairly and squarely on his shoulders; he has let down local government in rural and urban areas alike.

We also heard from the hon. Member for Mid Dorset and North Poole (Annette Brooke), who made a significant contribution in calling for greater clarity about funding for local government. She made the point that there is no scope in her local authority for more efficiencies. She and others have seen through yet another scam from the Secretary of State: his “50 ways to save” document. Let me tell him that all local authorities have been doing that for years. I do not understand what he is talking about when he issues such a document. It might make a good soundbite in a press release, but he is not living in the real world.

We also heard from the hon. Member for Totnes (Dr Wollaston), who talked about the cost of delivering health and social care needs in rural areas and referred to the cost of rurality. It was interesting that the Secretary of State, sotto voce, did not seem to understand the term “rurality”. Perhaps that is an indication of the sort of problems that local government in rural areas is suffering from.

Finally, the hon. Member for Penrith and The Border (Rory Stewart) talked about the importance of communities, but when the Secretary of State agreed the unprecedented cuts in local government funding, he drove a metaphorical knife into the heart of local communities up and down our country.

I regret the tone and the personalisation. As far as Government Members are concerned, this debate is about the share for rural communities from an inherited budget that, as the hon. Gentleman will know, left this country in a terrible state. It is about the share for rural communities; that is what we are trying to fight for.

I remind the hon. Gentleman that there was a worldwide banking crisis and that it was Margaret Thatcher who deregulated the financial markets. The problems can be traced back to the big bang and the deregulation of those financial markets.

I will give way to the hon. Gentleman in a moment.

What I regret is the Secretary of State letting down or betraying local government. Again, it is important to understand that it was this Secretary of State who volunteered for the biggest single reduction in Government funding of every Government Department. Government Members might not like to hear that, but that is the truth of the matter. If the Secretary of State had stood up for local government, local councils would not be in the parlous situation in which they find themselves.

It is clear that the rural authorities are by no means the only authorities to have been dealt an almighty body blow by this Government—far from it. Councils in the north, councils in the south, councils in the east, councils in the west, county councils, district councils, borough councils, metropolitan councils, unitary councils, councils that serve urban areas and councils that serve rural areas: all have suffered at the hands of this Secretary of State. As I have already said, if he had done his job properly, today’s debate would not have been necessary.

I thank the hon. Gentleman for eventually giving way. Of course, his Government reduced the number of councils in Wiltshire and Cornwall that were underfunded in rural areas by abolishing them. Given that he has not found any alternative source for making the distribution of funds fairer, is the best he can offer to councils in Somerset and Devon the same prescription as his Government dealt those rural councils in Wiltshire and Cornwall?

Not at all. We are not making that point in any way, shape or form. Indeed, my right hon. Friend the shadow Secretary of State for Communities and Local Government has made it clear that Labour’s policy is to give a fair deal, a new deal, for local government and to allow local government on the ground to determine the shape of local government, rather than it being imposed from the top. The local authorities to which the hon. Gentleman refers wanted the local changes brought about by the Secretary of State at that time.

I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) on securing today’s important debate. It seems ironic that the first time I am at the Dispatch Box at this time of night since the last time I was here at this time of night, we are debating rural areas looking for fair funding. Last time, it was about urban areas, and Newcastle Members and others made the same sort of case for those areas.

I shall have to keep my remarks relatively short, as the hon. Member for Derby North (Chris Williamson) talked for some time, and I want to ensure that my hon. Friend the Member for Tiverton and Honiton gets the chance to sum up. If I do not cover everything Members have brought up this evening, I would be happy for them to come and see me—now or over the next few months—as we continue to argue passionately and with great determination over the issues raised tonight. However, as one of my hon. Friends commented a few moments ago, the tone of the debate changed dramatically when the hon. Member for Derby North decided to avoid the fact that it was the last Government who had pledged £52 billion in local government cuts. Labour Members have seemed not to want to discuss that in any way, while opposing every change and every reduction that we have introduced to deal with the deficit that we inherited from their Government. That cannot give any credibility to what they say about the money that is needed for local authorities.

The hon. Gentleman spoke of standing up for local government. What he should have observed tonight, and over the past few weeks, is the Secretary of State and other Government Members standing up for their local residents, for their communities, and for the hard-working taxpayers for whom we have introduced the council tax freeze option.

In that spirit—the spirit of Government Members standing up for their communities —will the Minister invite the Secretary of State to stand up for local government throughout the country, and argue with the Treasury the case for giving it a fairer share of the cake? Does he accept that its funding has been cut by 28%, which is a far larger reduction than any imposed by other Departments?

I thought that the hon. Gentleman had something to say that was different from what he had already said. Again, he avoided mentioning the £52 billion of cuts that his party had pledged to make. My point is that Government Members, including the Secretary of State, are standing up for the people whom we are elected to stand up for—the hard-working residents who will benefit from the council tax freeze that this Government are providing.

Let me say in the few moments that I have left that the thinking behind this local government financial settlement took into account ways in which councils can make progress in the years ahead, and that we believe it to be fair to both north and south and to both rural and urban communities. As others have pointed out, we have managed—although, I recognise, not to the extent that some would have liked—to reduce the gap between rural and urban. We have made adjustments to relative needs formulas to reflect the greater cost of providing services in rural areas. That is one of only three formula changes in the settlement. We have increased the weight of super-sparse areas in the formula, doubled the sparsity weight for older people’s social care, reinstated the sparsity adjustment for county-level environmental protective and cultural services, and introduced a sparsity adjustment for fire and rescue. As a result, funding per head is falling by less in predominantly rural authorities than in predominantly urban authorities, in all classes.

Members on both sides of the House are concerned about the 2014-15 settlement and the position up to 2020. Can my hon. Friend assure us that Ministers will be willing to discuss next year’s settlement, and to ensure that we get the settlements right from then onwards?

I can confirm that. I have had a few meetings with my hon. Friend, and he has—rightly—made a powerful case for people in rural areas. I can tell him that I shall be happy to continue to talk to Members from all parts of the country about next year’s settlement.

My hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) raised the position of West Somerset. I have visited West Somerset and met the council leader a number of times. I know my hon. Friend will agree that, given its critical mass—the area has just 35,000 residents—it must consider sharing management and services with other authorities.

There is much more to be said about this subject. I shall be happy to meet Members individually to discuss it with them, but I want to ensure that my hon. Friend the Member for Tiverton and Honiton has a couple of minutes in which to sum up the debate.

I welcome the powerful speeches that have been made by my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger), my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), the hon. Member for Mid Dorset and North Poole (Annette Brooke), my hon. Friend the Member for Beverley and Holderness (Mr Stuart), the hon. Member for Bishop Auckland (Helen Goodman), and my hon. Friends the Members for Romsey and Southampton North (Caroline Nokes), for Totnes (Dr Wollaston) and for Penrith and The Border (Rory Stewart). My hon. Friend the Member for Congleton (Fiona Bruce) would have liked to contribute, but, like many other Members, was not able to do so.

The extent of the support for this evening’s debate is clear from the number of Members who are present. I am sorry that more time was not available. I think that we should seek either a Westminster Hall debate or another debate in the Chamber, because it is clear that Members have more to say.

I welcome what was said by the Minister, who dealt with us very fairly. However, I ask him to listen, and to ensure not only that the words with which he is provided by his civil servants show that money has been given to rural authorities, but that those words result in cash and not just statistics. This is not about spending power; it is about what the councils are given in grant. We are seeking a fair share, and Members across the House have made a powerful case for that tonight. I welcome the fact that the Minister will look at the funding for 2014-15, because that is important. I thank everyone for supporting the debate tonight.

Question put and agreed to.


That this House has considered the matter of the local government finance settlement for rural local authorities.