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Rural Councils: Funding

Volume 741: debated on Wednesday 29 November 2023

I beg to move,

That this House has considered the funding of rural councils.

It is always a pleasure to serve under your chairmanship, Mrs Latham. I thank all right hon. and hon. Members for taking part in the debate.

There is nothing like a bit of competition between North Dorset and West Dorset. I would like to warmly welcome the Sherborne town clerk, Steve Shield, who is in the Public Gallery and is a finalist in the star council awards that will take place later today. I understand that Shaftesbury is also in those awards, so I wish Sherborne Town Council the best of luck; I am sure that the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for North Dorset (Simon Hoare), will make the case for Shaftesbury in a moment.

May I take this opportunity to warmly welcome my hon. Friend to his post as Minister for local government finance? I know that he is well versed in the many issues facing us not just in Dorset but across rural Britain. Many, like me, are pleased to see a Dorset MP in the Department for Levelling Up, Housing and Communities who is not purely obsessed with the north and urban areas and who can bring meaningful perspective to rural issues, particularly in the south-west.

Ten million people live in rural England. Those who work in the rural economy can expect to earn on average £2,000 less than those in urban areas. The rural fuel poverty gap is double the national average. Rural people pay on average 20% more council tax per head than those in urban areas. My other constituency neighbour, my hon. Friend the Member for South Dorset (Richard Drax) and I both represent the area with the worst social mobility in the country. I have a secondary school in that area that has been partly closed and another school where a third of the classrooms are in disrepair. We also have significant transport issues and social care challenges—in West Dorset, we have a community where a third of the population is over the age of 65.

My constituents are fed up with turning on the telly to hear levelling-up announcements for urban areas in the midlands and the north and hearing nothing about the rural south-west or rural Britain. They want to know, and have sent me here today to ask why rural hardship is not seen in the same way as urban poverty. They expect to see their representatives make the case to change that. That is why other Members and I are in the Chamber today.

It should be no surprise that rural matters are going up the agenda. Yesterday, the hon. Member for Somerton and Frome (Sarah Dyke) brought a debate to Westminster Hall about rural services. I commend my hon. Friend the Member for St Ives (Derek Thomas) for chairing the all-party parliamentary group on rural services and my right hon. Friend the Member for Suffolk Coastal (Dr Coffey), the previous Secretary of State for Environment, Food and Rural Affairs, on all the work that she has done.

I represent West Dorset, which is my home, and I am the sixth generation of a tenant-farming family, and am in the Chamber, almost 10 months on from my last debate, again to champion the cause of millions of people living in rural Britain who want a fairer system of taxation and service provision. Whereas before I focused primarily on the revenue support grant, I am here today to address the funding of rural councils more broadly, and particularly to speak in favour of my own, Dorset Council. That funding is perhaps more important today than it was at the time of the previous debate in January, given that little has changed to improve the situation for rural councils since then. It is nearly a decade since the local government funding formula was locked in. That means it is also a decade since the faulty distribution of the revenue support grant and the corresponding increase in council tax to compensate for the unfair—in my opinion—national distribution of Government resources. As the years have passed, the situation for rural councils, exposed relentlessly to the frozen funding formulas, has deteriorated, and the rural tax burden has increased for millions in England, including my West Dorset constituents.

A recent survey carried out by the County Councils Network and the Society of County Treasurers found that their members face overspending on their budgets by an enormous £600 million per annum. It found that 20 county councils and 17 unitary authorities right across the country will collectively overspend in 2023-24. There is no clear road map for improvement, so those councils are running out of time to find solutions to prevent insolvency. That is one of the reasons why it is important for me to bring this matter to the House.

Against that backdrop, it is a surprise that only one in 10 of those surveyed running well-managed councils are unsure or lack confidence that they will be able to balance their budgets this year—I hasten to remind hon. Members that it is a legal requirement for councils to do so—but without urgent action or reform, that number will increase to four in 10 next year and six in 10 by 2025. That is an unprecedented majority of our rural councils, and the County Councils Network is concerned about whether councils will meet the legal requirements within the next two years.

Why is that the case? What is causing the situation to be so difficult? Why is there an excess burden on rural people? It is due, first, to the formula that dictates the distribution of the revenue support grant from the Government to local authorities; and, secondly, to the corresponding levels of council tax that councils are forced to levy to cover their increasing social and services cost. As the Minister said to the Levelling-up, Housing and Communities Committee earlier this month, the unique characteristics and challenges of each local authority make it difficult to implement a national fix, as they often require bespoke solutions. I fully understand and support that idea.

I have spoken a great deal in this Chamber and on the Floor of the House about the revenue support grant formula and council tax, so I will touch on them only briefly for Members’ information. In 2013-14, we locked in a local government funding formula that distributed an unfairly low proportion of central Government resources and grants to rural councils; today, urban councils receive 38% more in Government-funded spending power per head than rural councils. This year, my local authority, Dorset Council, received just £700,000 from central Government, which accounts for just 0.2% of funding. Although my hon. Friend the Minister, who was on the Back Benches at the time, and I made the case very strongly for Dorset in the local government funding debate, the local council would probably say that other adjustments were made that offset that, so there was little if any net benefit. The rest must be sourced elsewhere—often through the council tax mechanism—or the council will enter an insolvency situation.

As a result, councils in the predominantly rural areas of the country that are overlooked when it comes to Government support must increase the rate of council tax, irrespective of their individual demands on services and demographics. Rural residents across the country pay an average of 20% more council tax. Across the County Councils Network, 68% of funding was received from council tax alone, compared with an average of 56.8%—it is, of course, lower in most urban boroughs. In everyday terms, that means that the typical band D council tax bill for someone living in Dorchester, Sherborne, Bridport or Lyme Regis—or any of the 132 parishes in West Dorset—will be over £2,000 a year.

While focusing on our situation in West Dorset, I should explain why the existing system of rural council funding cannot continue unamended. In West Dorset, a third of residents are over 65. It is a vast geographical territory, covering over 400 square miles of the most beautiful and picturesque part of the country. Although that may sound idyllic, it is tremendously difficult to travel without access to a car or the ability to drive, especially as local public transport options have become more and more restricted. Sixth formers in Dorset— 16 to 19-year-olds—have to pay to get the bus to go to sixth form. Why is that the case, when the Government pump billions into TfL and Londoners get travel for free? That cannot be right.

These three factors—the revenue support grant, council tax and local characteristics—regularly combine to disadvantage rural communities and people, imposing barriers where there need not be any. That can be felt across society. Taking them together, it is fair to say that rural councils continue to be placed under unique pressure.

This has a knock-on effect on households and businesses. We have seen it clearly during the cost of living crisis, where three in four councils, many of them serving rural residents, have increased their council tax by the maximum permitted rate. Accounting for the increase, a typical band-D council tax bill for rural residents is 27.5% higher than that faced by London residents.

It is fair to say that the high rise in energy prices has disproportionately affected rural households and businesses. That is against the backdrop of a rural fuel poverty gap that is already double the national average. In West Dorset, more than half of households are off grid, meaning that they have less access to energy support than people on the mains gas network. This is one of the primary reasons why, when Dorset Council established its household support fund for applications, its funding allocation was gone within a matter of hours.

Business rates are a very topical issue for rural councils. The simple nature of our local economy in West Dorset means that 97% of businesses are small or micro sized. They are not conglomerates; they are not transnational. They are often run by people, perhaps from home or from a small premises at the local trading estate, employing one, two, three, four or five people who are attempting to make a modest living. It means, however, that income derived from retained business rates by the council in West Dorset is 14.5%, whereas Tower Hamlets, for example—to make a comparison with London—receives over 50% from its retained business rates. To put that into financial terms, it is £50.2 million for Dorset, but £176 million for the borough of Tower Hamlets.

We ought not to forget the importance of social care. I recognise that this area is often debated in the Department of Health and Social Care, but the reality is that local government has an important responsibility for delivering social care and services. Residents across the country would be forgiven for overlooking the acronym for adult social care—ASC—on their council tax bill, but rural councils are forced to derive huge amounts of their income from the adult social care precept. In total, people would expect three quarters of the amount they pay in council tax to go towards social care support, simply because older people tend to reside in more rural areas. As I mentioned earlier, a third of our population in West Dorset is over 65, compared with just 10% in some London boroughs. The matter of an ageing population of concern for all rural councils, as rural residents get 13% less per head in social care support overall. That is one of the main drivers for the council tax increase. The matter of social care becomes sharper when we make a comparison between urban and rural. Residents in an average band-E property in West Dorset will pay an annual social care precept of £204.04. For the same property in the borough of Westminster, the precept is a mere £3.20. The difference is absolutely enormous.

The dividends are especially visible in funding for young people’s services and schools. Across Dorset, there is core school funding per pupil of £5,728, which places the council in the upper third of upper-tier local authorities for education spending. Other rural authorities fare just as poorly or even worse. Leicester, Cheshire and Bedfordshire are all ranked in the top 10 upper-tier local authorities for core school funding per pupil. Looking again to the capital for our rural to urban comparison, it is possible to see that London boroughs occupy all 10 of the top 10 spots for core school funding. Islington, Westminster, Camden, Southwark and Hackney all spend over £7,500 per pupil when it comes to education funding. Tower Hamlets is top of the list; it spends £8,122 per pupil. That is 40% more than is spent on a child in education in rural Dorset. That disparity is simply unfair and is not acceptable for those who are being educated in rural Britain.

My hon. Friend is making an excellent speech, and I am grateful to him for bringing us together on this important topic. On the matter of disparity in funding, does he recognise that, on top of the ludicrously exaggerated funding that London councils get, they each make millions more on parking fines that they are then able to put back into their communities? That is not taken into consideration, so their budgets are inflated beyond even that which we see in the basic figures.

I wholly agree with my hon. Friend, but it is worse than that. One of my asks for the Minister is to take away and investigate this: it is important that we all note that London is getting £236 million a year more of Government grant than the formula says it should, and that £166 million goes to five London boroughs alone. I very much appreciate that my hon. Friend and neighbour is very new in his ministerial post, and I am not expecting him to answer some of these very tricky questions, but I would appreciate it if he would ask his officials to look into that and gain an understanding of some of these matters, because for those of us representing rural constituents this is simply unacceptable. I thank my hon. Friend the Member for Rutland and Melton (Alicia Kearns) again for her kind intervention.

It is not just education, businesses and social care that this unfairness pervades, but transport too. The stark reality is that urban councils are in the privileged position of spending three and half times more on public transport than rural councils. We can see that demarcation clearly between London and West Dorset; I have given enough comparators to make the point. If anything, it should be the other way around, because of the rural disparity.

Something is not right in the formulas and the understanding of them. We do not have a dedicated or overfunded public body to oversee our transport network in Dorset, as other areas do with Transport for London, Transport for Greater Manchester and so on. In West Dorset, unlike many urban areas, further education students do not receive a free or subsidised travel pass to get to their places of study. Residents are not in the luxurious position of receiving eye-watering grants for public transport in rural Britain, and definitely not in West Dorset. Instead, they have to rely on the good will of community operators to keep running. That is not sustainable; I hope that Transport Ministers will consider that point. It is evident that the disparity in national mechanisms for council funding between rural and urban areas is far-reaching, cross-cutting and very difficult for councils on the wrong side of the formulas.

Almost 10 million people live in rural England. Most hon. Members present represent rural constituencies, and many of us are rural residents ourselves. We want action to address the challenges and financial difficulties that our local councils face. It is important that we see the continuation of the excellent Government work across the board to improve the fairness of this crucial aspect of Government policy—something that I, the Minister and others have been attempting for some time. Primarily, we need fundamental reform of the frozen funding formulas, which in my view constitute a levy that penalises rural residents simply for where they live. That strikes at the heart of fairness, which is not on.

This country has moved a long way in the decade since 2013-14. It is fair to say that the funding formulas and the revenue support grant formula were geared to a very different climate in 2013-14. We know that many things have changed; many have improved and some have got worse. Other models such as the Green Book should also be amended to ensure that fairness is realised. If we continue with rural councils not receiving the fairness that they deserve, county authorities will have no choice but to cut back on some of the services that they have to provide. It is important, and only fair, that I let the Government know that that is not acceptable.

I am pleased that my neighbour and hon. Friend the Member for North Dorset is the Minister for local government finance. He brings a level of understanding and insight from Dorset that I do not think we have seen in that role before. I had the same debate 10 months ago with one of his predecessors, in whose constituency council tax was £800 lower than in the Minister’s and mine. It is a difficult situation for an MP to comprehend unless we see it day to day with our constituents, as the Minister and I both do.

I wish the Minister well in making progress. Rural England is crying out for his help. I look forward to him being the messiah of local government finance. The February debate on local government finance is always an interesting one. I look forward to it and hope that we will have a further conversation then, and much more progress in the meantime.

It is a pleasure to serve under your chairmanship, Mrs Latham. I congratulate the hon. Member for West Dorset (Chris Loder) on a well-informed and passionate speech. I am going to talk about local government in Scotland, which is a devolved matter but which I believe impinges on what the United Kingdom Government do in England and Wales.

I had the honour of serving twice as a member of the Highland Council. The word “messiah” rang a bell with me, because there is that wonderful chorus from the “Messiah” about “Wonderful, Counsellor”; I always regard it as my personal tune. The Highland Council is the biggest council in the entire United Kingdom. It is 20% larger than Wales. We have 7,000 km of road, 200 schools—the most of any local authority in the UK—and extraordinary diversity, from the conurbation of Inverness to very remote areas with very sparse populations. These bring particular challenges that all rural Members here will recognise: distance, inclement weather and everything else that makes funding those councils much harder.

In my brief contribution today, I want to highlight a cautionary tale. I am sorry that no Scottish National party Members are present, because this is an issue for them and their Government in Scotland. The Scottish Government in their infinite wisdom have seen fit to impose a council tax freeze. For the Highland Council, that means that £108 million of savings will have to be found over the next three years. That is incredibly difficult for my former colleagues, because £108 million represents slightly more than half the annual education budget for the Highland Council—that is how massive it is. I do not envy those good people of all parties: Conservative, Liberal, Labour, independent and, indeed, Scottish nationalist. I do not know how they will do it.

I believe that there is a cautionary tale here for the United Kingdom Government. We talk about what exactly is meant by levelling up. The first point is that this sort of thing happening in the highlands of Scotland or in other parts of rural Scotland amounts to a form of levelling down. Services will be cut, investment will be cut and—this is my message to the Minister—that sits unhappily with the Government’s policy of trying to ensure levelling up. If we have part of the United Kingdom going in the opposite direction, it makes the equation that much harder for the UK Government to square, notwithstanding the good intention and efforts that might lie behind the initiative.

This is my second and last point. When His Majesty’s Treasury agreed the local government settlement as part of the Scottish Government settlement, was the intention that the Scottish Government would take those resources and decide to freeze council tax? I do not believe that that is what any Treasury of any Government of the UK would see as a worthwhile outcome. Will the Minister be kind enough to convey that message back to the Treasury? As and when it looks at the Scottish Government settlement, it might just want to take a good, hard look at what the SNP Government are doing in Scotland and how it is having a direct impact on my constituents—the children, the old people and the people who need carers and social help in my constituency. I want to say on the record that I very, very much resent that.

I thank my hon. Friend the Member for West Dorset (Chris Loder) for giving a great opportunity to speak in support of our local rural areas and councils, and for raising this timely issue.

As we have heard, it does not take an economist to recognise that the pressure on Government Departments to find savings in public spending will mean that local authorities do not get what they need to deliver the services that they want to deliver. In that context, it is more rather than less important to distribute the available resource fairly between different areas. I am here to press the Minister and his Department to ensure that the 2024-25 local government finance settlement is fairer for local authorities. I say that as an MP who represents a remote island community with its own unitary authority, the Council of the Isles of Scilly, which has had discussions with Government Ministers and me for every year I have been an MP to try and resolve their funding challenges.

I also speak as an MP who represents a sparsely populated rural area served by the large unitary authority of Cornwall Council. It is a great delight to be joined by my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) to campaign for this together. I also speak as the chair of the all-party parliamentary group on rural services.

I remind the House that urban councils receive 38% more per head in Government-funded spending power than rural councils. As we have heard, rural residents will get 13% less per head in social care support. Rural councils have to increase council tax to balance their budgets, and that means that rural residents now pay on average 20% more in council tax per head. That additional tax on rural residents is a result of Government underfunding over many years. The cost of living in rural areas is higher than in urban areas, and that rural earnings are lower. The cost of service delivery is also higher in rural areas.

The Government have sought to address the disparity. Following a campaign by the Rural Fair Share Campaign and the Rural Services Network, the Government accepted that “such a correction”—so that there is a proper recognition of the additional cost of delivering services in rural areas—“is warranted”. Changes were approved and the formula was changed. The new formula is still, by and large, the one in operation today. The problem is that that uplift to rural council funding has not been realised, because on average 75% of the exemplified gains were lost to authorities as a result of damping and other changes. Damping aims to protect councils from volatile changes, which is understandable, but the Government froze the formula so that it was not changed further. As we have heard, there are London local authorities that receive millions of pounds a year more in grant than the formula says they should.

We were not deterred. With the support of the Rural Services Network, many parliamentarians, including me, convinced the Government that a fair funding review was needed. That was in 2016, soon after I became an MP. The Government then announced a relative needs and resources review, which was intended to ensure a fairer formula for the allocation of Government funding, with a new funding formula in place for the 2020-21 financial year. If that had been delivered as intended and as we expected, we would not be having this discussion today, and the councils we represent would not be facing such difficult decisions about how to spend money not where they want to, but where they need to. The review has been delayed over and over again. It has now been seven years since the review was announced, but the formula has not been changed.

It is time to act. The Minister must deliver fairer funding by applying in full, without damping, the effects of the changes made but not fully implemented to the needs assessment component of the formula that was agreed back in 2013. The Minister must ensure that funding for social care reform proposals uses a formula that recognises a whole range of costs faced by rural councils and care providers. The Minister must also address fairer funding through the completion of the needs and resources review for local government funding in the first 12 months of the next spending review period, and fully implement the changes promised in 2021 for implementation in 2026-27. The Minister must also fight for, defend and maintain the rural service delivery grant.

I recognise that that will not be easy. However, we do not go into government for an easy life, but to correct unfairness and inequality. Our Government believe in levelling up, and I am not aware of a better way to level up than to fairly fund the day-to-day public services that our councils deliver, that our constituents depend on and that they have a right to expect.

Order. Because of the number of Members who want to speak, any Member who did not notify me that they wanted to speak will not be called.

It is a pleasure to serve under your chairmanship, Mrs Latham. I congratulate the hon. Member for West Dorset (Chris Loder), my neighbour, on securing the debate.

I must first declare an interest as a proudly active Somerset councillor. My colleagues and I at Somerset Council and across local government know how difficult times are for councils right across the country. We must not forget the crucial role that local authorities play. They provide essential frontline services to the residents they serve. To do so, and to survive, they must have the necessary support from central Government. In 2018, when the Prime Minister was Under-Secretary of State for Local Government, he claimed to understand just how important local authorities were, so I have been disappointed that more support has not been forthcoming during his premiership to enable local authorities to deliver services to their communities.

Local authorities need to be able to provide first-rate social care for adults and children. The Conservative former leader of Somerset Council has regularly recognised that adult and children’s social care is broken. He has called for immediate investment by Government in social care. Somerset Council is facing a £100 million black hole in its budget, with a significant overspend in social care. The latest estimates show a £70 million increase in costs for 2024-25. The stark reality is that inaction now will cost lives.

The cost of providing services in rural areas, like the majority of Somerton and Frome, is more than in urban areas, yet rural residents will receive 13% less in spending per head on social care support. As a result of underfunding, rural councils are forced to increase council tax to its highest rate in order to balance their budgets. The system is grossly unfair, as we have heard. An increase of 1% in council tax in a largely rural county like Somerset would bring in only £3.4 million, whereas in Surrey, for example, the figure would be about £8 million.

It is clear that in Somerset the urgent pressures we are facing are in part the fault of the previous Conservative administration, which refused to raise council tax for six years between 2010 and 2017—the longest freeze of any council in the country. That irresponsible move saw a minimum shortfall of £24 million per year, and delivered a total cut to services of £150 million. In the same time, the Government cut council funding by 40% until 2020. Combined, those policies have left it impossible for the council to meet its statutory obligations for funding social care at a time of high inflation, which has forced cuts in services that local people rely on. Somerset Council is also ranked towards the bottom for the Government public health funding that it receives. That is not right, and it is not fair.

We are waiting for the 2024-25 local government finance settlement; I hope that it will be fairer for rural local authorities. As the hon. Member for West Dorset mentioned, the current local government funding formula, which has been largely unchanged since 2013-14, has left rural areas with huge losses, and 75% of the exemplified gains were lost to local authorities due to damping and other changes.

Local government has been waiting for the fair funding review for seven years since its announcement, with several years of delay. If it does not urgently address the issues that rural councils are facing, it is highly likely that many more authorities will go bust and end up issuing section 114 notices. That can and should be avoided, as there are no better bodies to run local services than the people who live in the area that they serve. I hope that the Minister, another neighbour of mine, is listening to the very stark cost of ignoring the bleak reality for local authorities and the communities they serve across the country.

I thank my hon. Friend the Member for West Dorset (Chris Loder) for securing this very important debate. I could waste time setting out the problem that he has made very clear, but what we should be doing is focusing on the solutions. Some 21% of the population—12 million people—live in rural areas. Too often, they are ignored, forgotten and marginalised. What we really need is a proper strategy for rurality. Wouldn’t it be nice to have a Minister responsible for rurality across Government Departments?

Today, we seem to be focusing much more on the exact amount that goes to local government, instead of looking across the piece at the totality of money that goes through the funnel of local government for health, education and transport. What we need is an approach that looks at that in the round. The Government have to accept that the original plan in 2010, which effectively tried to shift the balance of funding away from central grants and towards council tax and business rates, is fundamentally flawed. The problem is that it has baked in underfunding, which has just got worse and worse each year.

A courageous Government would recognise the imbalance and do something that sounds almost impossible: cut what we give urban communities. We all know that times are tough. Asking for more for rural without cutting urban ain’t gonna work. It will be a brave but fair move, and this Government are all about fairness.

Devon is in exactly the same position as has been described for Dorset and Somerset, and the fear of a section 114 notice hovers. It paralyses action. It is not right for our communities, because their lived reality is that the life chances of children are considerably reduced. A primary school in my constituency is looking to lay off six teachers—think what that will do. It is a small school, and children in their first proper year of education are predominantly in nappies; one teacher’s full-time job is changing nappies. That cannot be right. Housing is in short supply, and it is not just the challenge from tourism and Airbnb. Even the Campaign to Protect Rural England launched a cry for help last night —a cry for more affordable housing from an unusual ally.

All the flood plans generally look at value for money in large conurbations, and rural communities get forgotten. The flood money is not ringfenced. In the last storm, one of my villages was under metres of water and there was a considerable amount of sewage. There was no money to put the damage right, and there is no money in Devon County Council to put in place a proper flood prevention plan. People in the village live not with carpets but with concrete floors. They say to me, “Anne Marie, there is absolutely no point in carpeting, because we know that when the next flood comes, we’re going to have to replace it, and it just makes the clean-up much harder.” They live on concrete, and that it is a fairly squalid condition to be living in. It is not right.

On transport, we are lucky if we even get a bus going to and from the same village on the same day. Transport is heavily underfunded, and it is yet another Government Department grant that simply is not fit for purpose.

What are we going to do about this? We need a fair deal for the countryside. I saw the Minister nod his head and say, “Actually, it is me who is looking across all these Government Departments,” in which case I very much look forward to him giving us some answers, because we cannot carry on living like this. It is not right, it is not fair and it is not moral. Why should my young constituents living in a rural constituency have worse opportunities and life outcomes, and why should the older people suffer because the social care is simply not there? It is not right, it is not acceptable and something must be done.

It is an absolute honour to serve under your stewardship this morning, Mrs Latham. I pay tribute to the hon. Member for West Dorset (Chris Loder), who made a very good speech. It is great that he introduced this topic for us to coalesce around, although I will say something that right hon. and hon. Members might not like to hear: I have analysed the 6,366 words that the Chancellor used in his autumn statement last week, and not a single one of them was the word “rural”. That might be an accidental and pedantic omission, or it might tell us more than the Chancellor intended. It certainly rings bells with rural communities in Westmorland, who feel ignored and taken for granted.

I want to make two or three quick points about the formula for funding rural councils. First, authorities such as mine are inadequately funded to take account of the number of temporary residents in our communities. Some 227,000 people live in the area administered by Westmorland and Furness Council, and we have something like 20 million visitors to the lakes and dales every year. Some stay overnight, but most come as day visitors. The pressure they put on the roads and other parts of our infrastructure is significant. Every single one of them is welcome, but it seems wrong that we are not in any way compensated, particularly with highways funding, to acknowledge the fact that we are the biggest visitor destination in the country outside London. I congratulate the council on doing its job and making a methodical, good effort to tackle the state of our roads, but it is not fair that it is not funded for the people who visit.

Secondly, others have mentioned sparsity. I have a mere 130 schools in my constituency, unlike my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone), but they cover a huge area, with many primary schools with fewer than 20 children and many high schools with fewer than 200. Of course it is more expensive to provide services in such dispersed areas, and sparsity is not a sufficient part of the funding formula. All that is against the backdrop of unfair funding for rural councils in general. On average, a person living in a rural community such as mine receives £105 less in central Government funding than their urban counterpart, and pays £104 more in council tax.

I want to make two points about second homes. First, the people who are lucky and well off enough to have a second home in a community such as mine can come and buy a home in Ambleside, Grasmere or Appleby, and they may turn it into a holiday let for a few weeks a year. They can therefore not pay any council tax, and because they are a small business they pay no business tax either. That means that people on very low incomes in Appleby, Kendal, Ambleside, Windermere and so on are subsidising wealthy people to have a second, third, fourth or fifth home in our communities.

I am pleased that the Government have said that they will allow councils to double council tax for second homes. That is good news. Westmorland and Furness Council reckons that will bring in an extra £10 million to help local residents. The council, which plans to start this scheme in April, has done its duty by giving second home owners the necessary 12 months’ notice. My question is: have the Government got their house in order? Will they be permitting councils to double tax on second homes from April 2024? If they fail to do that, will they compensate the councils that were planning to make use of this new and welcome power?

Let us talk briefly about social care. Rural councils get an average of 14% less funding for social care than urban councils. However, in many rural areas—certainly mine—the number of older people who require that care is much greater. The average age of my constituents is 10 years above the national average. Our area also has a complete crisis in affordable housing for both private and social rented homes, with average house prices about 12 times the average wages. So where do the workforce live? As a consequence of the housing crisis and our older population, we have a serious care crisis in our area. Earlier this year, 32% of our hospital beds were occupied by people who were fit to leave hospital but could not receive a care package. Why? Because there are not enough homes for the people who work in social care. We are not paying those people enough money. The Government have made promises before but have failed to act, letting down our old people and our rural communities.

Let us talk briefly about transport poverty, which is a huge issue that we all have in common in our rural communities. The £2 bus fare is very welcome, but it is of no use whatsoever if we have no bus. We need to fund our younger people to get them into further education—sixth forms and apprenticeship posts—but we need to make sure that there are working buses to do that. One reason that is not the case now is that the Government have not devolved the powers that they devolve to urban areas to rural ones. Why will they not allow communities like ours to have full devolution so we can have our own bus companies and fund rural bus services? They will only allow that for urban areas that have a Mayor, and that is disadvantaging rural communities. I hope the Minister will answer that.

It is an honour to serve under your chairmanship, Mrs Latham. I congratulate my hon. Friend the Member for West Dorset (Chris Loder) on not only the time we worked together at the Department for Environment, Food and Rural Affairs, but his excellent speech. I have learned that we share a lot of characteristics in our different counties, and many of the same concerns.

Suffolk County Council is a well-run council. It has not gone off speculating about property and other crises that other councils have found themselves in. It has also tried to innovate over the years, recognising the financial challenges that the country was left with in 2010 when the last Labour Government were in power. Suffolk Libraries is an example of that innovation. While many other councils around the country were closing libraries, Suffolk took the opportunity to effectively create a community interest company—or a charity, as it is now. That is an even better service than when it was run by the council, so Suffolk is not averse to innovation and bringing the communities in.

However, from some of my discussions with the county council leader, I am concerned that the basic costs are rising, particularly those associated with special educational needs and disabilities. I can think of several children who, per individual, cost about £1 million a year to support. I know that we have to support those children—of course we do—but this should be recognised more strongly in the local government finance settlement.

Another big surge in costs has been from home-to-school transport. As has been said by many, that is really challenging. One of the costs for people living in these wonderful parts of the countryside that we represent is having to travel much further for services, or it costs more for councils to provide the services directly to the local communities. That issue is worrying not just Suffolk County Council but councils right across the country.

The other big issue is the increase in the national living wage. That is welcome—it is in line with the Government’s policy to keep the national living wage in line with two thirds of median earnings—but it needs to be recognised in the support given to councils. The increase is, I think, 9.6% next April. That is a significant increase to the cost of providing services, so I hope that the Government will look at that.

Rural councils have always been innovative because they have had to be, partly because they need to deliver services in a slightly different way. If I think about what happens here in London, Westminster, Wandsworth, and Kensington and Chelsea all share just one waste and recycling centre, and it is very easy for people to get to. That is not true for rural council areas, where people are driving many more miles to use those services. I welcome the funding—for example, the recent pothole funding—that has been given to councils around the country in recognition of the lengths of roads in their areas, but it is the ongoing, daily element that we must keep in mind when we have the local government finance settlement. I hope that we can consider these issues earlier to try to give certainty to officers and councillors on how they will manage in the years ahead.

Councils have been innovative and there have already been mergers. We have merged several of our district councils. East Suffolk is the largest district council in the country, not necessarily by geography but by the number of people represented, and the current administration has benefited from the good stewardship that the Conservative administration had in the past. There is no doubt that the funding formula needs revisiting to reflect the challenges we face. I know that my hon. Friend the Minister, who I congratulate on his role, will consider that carefully.

There are other aspects of deregulation that we should consider. Take, for example, community transport projects, where willing volunteers help get people to day clubs or other places like that; we need to take advantage of having left the European Union and deregulate things like extending the rights to drive C1 and D1 vehicles— D1 particularly when it comes to community transport. We can do that. It is within our powers. The Department for Transport says it needs primary powers. If primary legislation is what is needed, then let’s go for it, but I think there are other ways.

Overall, unemployment is much lower in rural areas. That is why the proportion of pupil premium and other factors in the school funding formula do not benefit rural communities, despite the national funding that has been put in place. We need to recognise the challenges we face. I look forward to the Minister giving us some assurances later.

It is an honour to serve under your chairship, Mrs Latham. Local councils are the workforces of our communities. They deliver vital services and aim to create thriving towns and villages for people to live in. This is often very serious work, with decisions being taken by people with great skills behind them, but often the officers and councillors are not very well remunerated for the hard work they put in. The changes they make can have a real and immediate impact on people’s lives. Councils are responsible for everything from bins to social care to potholes. Some people in my part of Devon would say that they need reminding from time to time that they are responsible for filling in the potholes, rather than just being responsible for them—but, in short, they do a lot of very serious and important work.

East Devon District Council and Mid Devon District Council are excellent examples of local councils. They work hard to improve people’s lives. But that work has been—to use a word I have heard Ministers use a lot in recent days—fettered by this Conservative Government. They have presided over a 31% fall in grant income for councils during their time in office. For some councils, the situation is worse. The settlement received by Mid Devon District Council last year was, in real terms, a little less than 50% of what it received in 2015-16.

The Institute for Government found that the biggest impact had been to shire districts, which saw their spending power fall by over 20%. That puts them at the bottom of the league for spending power by type of council. District councillors in Devon tell me that what they need from Government is some certainty about the future. They are often offered only one or two-year settlements, the most recent of which was in July 2022 when the Secretary of State for Levelling Up, Housing and Communities announced a two-year settlement for councils. That was inferior to the multi-year settlements they are after, which would enable medium-term planning.

The hon. Gentleman makes an important point. Local authorities could deliver much better road improvements if they had a three or four-year plan and knowledge of what the funding would be, because they could make the money go so much further, and it would reassure a lot of local residents.

I am grateful to the right hon. Gentleman for that intervention. I am hearing—from, for example, the finance lead on my local district council—that because they can only plan one year ahead, they cannot give certainty to providers, such as providers of social care. That is particularly true for councils in Devon that have been forced to make cuts because of funding cuts from central Government. In some parts of the country, we have seen that drive councils to the point of bankruptcy.

Councils are trying to be innovative in how they address these shortfalls and problems and, as I understand it, central Government have been encouraging them to be enterprising in seeking to make money. Some have been successful in that, but we have also seen some shocking failures uncovered in recent documentaries and scandals about solar farms or investments that have flopped.

In my own part of Devon, Mid Devon District Council sought to set up a housing development company—3 Rivers Developments—that is wholly owned by the council. I want my council to be very good at delivering social care and school allocations, and we already rehearsed the fact that it ought to be doing the recycling and filling in the potholes. I do not want it to be learning about how to be a building company because, frankly, we have seen enough building companies struggle to make ends meet; we do not need our councils to be in the same position.

Let me tell Members another anecdote. The former chief executive of East Devon District Council joked with officers and his Mid Devon counterpart that, despite Mid Devon being landlocked, they council ought to put up signs saying, “Beach this way” to enable them to hike up parking charges for the beach—which, frankly, is what enables East Devon District Council to get by right now. I am almost out of time, so my last plea is that the Government consider the fair funding review, which we have heard about from other hon. and right hon. Members. That would address the desperate need for rural councils to receive more money.

It is a pleasure to serve under your chairmanship, Mrs Latham. I thank my hon. Friend the Member for West Dorset (Chris Loder) for introducing this important debate and congratulate him on the way he expertly presented his case. I represent three local authorities plus a county council. I will focus mainly on Tewkesbury Borough Council and the county council.

Tewkesbury has been a financially responsible borough over many years and has not borrowed, but because it kept its spending low and under control, and kept its council tax low, it now suffers; a 1% increase to Tewkesbury Borough Council’s income is far less than it would be to an authority that already spends a lot more, so it gets penalised for having been a responsible council for so many years.

I am calling not for greater Government spending—the Government are spending an awful lot of money, and arguably too much—but, along with other right hon. and hon. Members, for a fairer allocation of that money. If any Government say that the allocation given to rural areas is correct, why are other areas getting more? Looking at it the other way, if other areas have much higher levels of spending and the Government say that is correct, how can what rural areas receive also be correct?

SEND children in Cornwall receive just over half per child what those in Camden receive. How can that possibly be right?

It is not right. School funding has been unfair for many years, and that is not just about rural areas. It is down to a complete mismatch in what I think was called the area cost adjustment, which we suffered under for many years, and some areas just do not get the adequate funding or funding comparable with other areas. I am glad to say that my hon. Friend took one of my points, so I will skip on.

In what ways does the underfunding of rural areas manifest itself beyond those we have already discussed? In planning, lower funding means delayed decisions and that some councils and planning authorities are reluctant to turn down inappropriate applications because they simply cannot afford such applications to be taken to appeal. Tewkesbury is the fastest-growing area in the United Kingdom apart from London, so we are not nimbys in any way, but we do need to be able to fund the planning system properly.

Another big problem is coming: I am told that, in Gloucestershire as a whole, up to 200 asylum seekers are to be given a right-to-remain status. At the moment, they are living in hotels, which is of course completely inappropriate for them. They will need to be found housing, but that will cost an awful lot of money. If that is their status, it is correct that they should be found proper accommodation. The decision to grant them that status, which is probably quite right, is for the Government, but money must follow that decision, and we do not see any prospect of that. That is a big worry in our area.

Rural transport has been covered in great detail, so I will not go over all that, but I echo what was said by the hon. Member for Westmorland and Lonsdale (Tim Farron) in that the £2 bus fare is absolutely useless if there is no bus. So many areas have seen their bus routes removed. In my village, the bus has been taken away, so if I want to travel to Gloucester or to Cheltenham, as I frequently do, I have to get a car to take me to Tewkesbury town to do so. We are not the only village to have lost our bus; that has happened across the country.

I do not have time to go into the many other details that I was kindly sent by the county council. A real benefit for rural counties would be to put an end to the process of ad hoc competitive bidding for short-term funding and instead to provide longer-term revenue settlements so that they know what they can do and what services they can provide. That is the way forward as they see it. There is no reason why rural areas should be as underfunded as they are. As I said, I am calling not for more Government spending overall but for a fairer allocation.

I am pleased to speak under your chairmanship, Mrs Latham. I thank my hon. Friend the Member for West Dorset (Chris Loder) for securing the debate.

When my hon. Friend the Minister accepted his position, he might not have realised that he was essentially agreeing to be hunted down by the Member for Rutland and Melton on a weekly basis. On that, I urge him to open his diary—after my speech, of course—and put in a slot for us to have a private discussion about this matter. I thank him for getting his pen out so quickly. Having set out the ground rules of our relationship, I will not repeat many of the arguments made by my hon. Friend the Member for West Dorset. As we all know, the reality is that it costs a lot more to deliver services in rural areas, and if we are truly to level up the whole country, we need to deal with the funding imbalance.

Rutland County Council and Leicestershire County Council are both severely underfunded. For example, if Leicestershire, which my hon. Friend the Member for West Dorset kindly mentioned, was funded at the same level as Surrey County Council, we would receive an additional £104 million to help the people of Leicestershire. On a similar basis, neighbouring Lincolnshire County Council, which includes Stamford, would receive another £116 million to support its people.

According to Leicestershire County Council, its budget gap is set to grow by £13 million next year and, realistically, could exceed £100 million by 2027-28. Beyond council tax, the east Midlands receives the lowest levels of public investment of any UK region—something that we have to end. I am seeing the repercussions of that low public investment in my constituency. Leicestershire County Council has decided to pull out of the next stage of a bypass. In effect, we will have half a bypass. If the county council had built the north and the south routes when I had secured the money from Government to build the entire bypass, we would not be in this position now. However, due to the fiscal situation that it finds itself in, we will now have just half.

Rutland County Council has been an effective unitary authority for many years and we are very proud of our independence. Indeed, the Minister’s predecessor visited our county regarding this exact topic on my invitation—another invitation will follow—and he found us to be one of the most fiscally responsible and effective councils when we were under Conservative leadership.

However, we are required to raise a shocking 80% of our revenue through taxation, when the national average is just over 60%. That means that for a band D council tax property in Rutland—hold on to your hats, ladies and gentlemen—the owner pays £2,365. That is the highest in the country, despite the fact that we are in the bottom 10% in the country for social mobility. What does that mean? We receive £331 less per household in Government funding than other councils, we have the highest council tax in the country, and we have some of the worst social mobility.

However, the Minister will be pleased to learn that I have not just come here to tell him that he must fix the problem; I have come with a solution. At the start of the year, I considered how we could bring fairness back to funding. I do not believe that the fair funding review is necessarily feasible, unfortunately, due to the £4 billion cost that it would probably incur, so I considered the most noble of Conservative aims: how do we improve social mobility?

On that basis, I looked, for example, at affluent counties such as ours—Dorset, Rutland and Leicestershire —that look like they do not have deprivation, but actually the pockets of rural poverty within them are something that no MP would ever forget if they saw them, because they are so heartbreaking. We know that it costs far more to deliver services in our areas, but council funding formulas are blind to social mobility, with the Treasury settlement funding assessment targeting only areas with high deprivation.

Adjusting for deprivation, the most socially mobile areas end up with funding allocations that are over 50% higher than the least socially mobile areas. Essentially, if someone is from one of the least socially mobile areas, they receive less funding. Indeed, I have worked out, by going through the figures, that there is actually a penalty, which means that someone’s chances of building themselves up and going where they want are low. I went to Onward and said, “Will you help me work this up into a proposal, to see whether I am mad?” The proposal is not a request for more money; I am asking for us to put social mobility alongside deprivation in funding formulas.

When we do that, we do not see many people lose out. Indeed, the Minister would benefit; his Parliamentary Private Secretary, my hon. Friend the Member for Blyth Valley (Ian Levy), would benefit; the Chair would benefit; and both speakers for the opposition parties who are here today—the hon. Members for Oldham West and Royton (Jim McMahon) and for Westmorland and Lonsdale (Tim Farron)—would benefit. This is not a party political solution; this is not about red wall or blue wall. It is about bringing fairness back, and it works. I have met the Chancellor and the Minister’s predecessor and they were both very interested in this proposal. We can do this within the existing fiscal headroom.

By introducing metrics for social mobility, we can target funding at both areas of high deprivation and areas of low social mobility in equal measure, ensuring that we address poverty while also boosting opportunity.

In conclusion, the funding formula has not changed for 10 years; we must change it. Will the Minister kindly meet me and consider our report, which I believe would fundamentally change this situation? I will just repeat this for those listening from the Treasury: I am not asking for more money; I am just asking for fairness and I am bringing forward a solution that will help Rutland and Melton and so many other areas around the country.

I now call the spokesman for the official Opposition. Both Front-Benchers have 10 minutes in which to speak. I am very disappointed that the spokesman for the official Opposition was late to this debate. That was a discourtesy to the Member who moved the motion. I hope that he will take that into account for further debates.

Thank you, Mrs Latham. I apologise to the hon. Member for West Dorset (Chris Loder) for being slightly late; I was trying to get the printer to spring into action this morning. I congratulate him on securing an important debate on local government funding, and I am delighted to respond to it.

We all know that our councils are at the frontline of public service delivery, improving the lives of millions of people and the places they live, work and holiday throughout the year. They are also often the last line of defence when people fall through the net of other parts of the public sector. We also know that local councils have borne a disproportionate burden of cuts throughout what has been a lost decade of austerity that has seen £15 billion taken from English local government since 2010. Rightly, therefore, communities are anxious for the funding they desperately need. More fundamentally, change is needed in the relationship.

It is worth responding to the debate’s many thoughtful contributions. The hon. Member for West Dorset rightly pointed to the now very fragile nature of local councils. Many are looking at the next year or two and wondering whether they will be able to make ends meet or face insolvency. We have seen some councils already in that position.

There has been a lot of talk about the rural service delivery grant, which has an important role to play, but we need to rewind to the inception of that grant. It was born from the area based grant that was primarily targeted at urban deprived communities to deal with social and economic need. That grant was deleted with a week’s notice by the then coalition Government and was followed by the rural service delivery grant. We saw no new money to deal with the growing need in our society and our economy; there was just a transfer of money from one part of the country to another and from one type of council to another, without there being a proper, balanced assessment of the funding need across the whole of England.

There were many calls for that assessment, and the Minister and I, when we were on the Local Government Association executive together, made the call for an evidence-based approach to how councils are funded. It is not right that we pitch one area against another when, fundamentally, if an old person needs adult social care in any part of England, they ought to get it. If a young person is at risk of abuse, they ought to be protected in every part of England. The same is true of every public service.

The Government’s response in 2014 was to commission a review into the unit costs of service delivery. It was intended to take into account the disproportionate cost in very sparsely populated areas, where it naturally costs more to deliver some types of services. That should have been the evidence base. What we have seen is a gerrymandering of the system throughout the years, whereby the money is always directed for political endeavours. We have seen it with the high streets fund, the levelling-up fund and the rest of it, where the evidence base does not hold up to scrutiny.

Beneath all that, councils are not getting the funding they need to provide even the basic services for the local population.

As a former civil servant, I take issue with the idea that, somehow, civil servants have agreed to a political formula. That is not how it works. Is he really suggesting that Rutland and Melton is a key red wall seat? We received £23 million of levelling-up funding, but I do not remember being at the top of the list of people who needed to be re-elected by being given some kind of handout from the Government. Funding was given on the basis of the best possible applications.

The debate is not about the levelling-up fund as much as about the debate around it. It is not for me to highlight which seats are or are not in scope of the target priorities of the Conservative party, but I do say that we need to move on from a system in which we shift around the country a diminishing resource that does not meet the need and when, one year, one council benefits but the next year, it may be disadvantaged. There has to be a funding formula that shows that every community gets the funding it needs and that takes into account the cost of need, the cost of demand and the cost of delivering those services.

We have heard a range of other contributions that I will not go into because of time, after taking that intervention. However, we must all acknowledge that the system we have is unsustainable. Several Members have said that there is no more money than there is in the envelope, and we have to accept that. The public finances are not in a good position. There is no wand that will magic up new money, but just looking at the local government purse without looking at the whole of the public sector would be an error.

We know that councils are best placed to deliver a wide range of services and that they are absolutely best placed for early intervention. We should not just look at local government; we should ask what we can do for worklessness, transport, and health and social care services, where earlier intervention by a local authority overall would cost the taxpayer far less and deliver a better outcome for local communities too.

There is no doubt that residents in local rural communities acutely feel the cuts that are being borne. That casts a unique shadow on our rural communities. We know, too, that there is hardship in those centres in relation to connectivity, schools and transport. It is not the fault of those councils, which are desperately trying to make it all work; in the end, it is about the overall funding settlement not being fit for purpose. We recognise that different councils have bespoke challenges that we need to address, and we have heard about some of those today: rural housing, social care and the cost of delivering services in very remote areas, whether those are schools, bin collections or public transport and their operations.

What does it mean in practice, if we do not get that right? It means, in the end, that the places that people care about and have invested in are ultimately disadvantaged. It means that town centres and village centres are no longer financially viable, and then we see shops being boarded up because the population cannot afford to stay there. Generations have to move further away, because they cannot afford to stay in their local areas.

The fact is that we have seen a lot of change in Government; we have seen a lot of change in ministerial positions and in the Secretary of State, but councils have just carried on going, waiting for a long-term funding settlement that never seems to arrive. The Rural Services Network found that the local government funding settlement for 2023-24 meant that urban councils were receiving 38% more per head from the Government funding formula than rural councils, which equates to about £135 per person. It is not difficult to see how that is arrived at, and the Government have said that they would fix what they have said was a “broken system”. At the Local Government Association conference in July, the Secretary of State for Levelling Up, Housing and Communities said that the system was “out-of-date” and needed “to be fairer”. We agreed with that, and we also accept that we cannot carry on.

We cannot continue to set one area against another. We see absolute deprivation in our rural communities, although it is sometimes quite hidden. If we look behind the net curtains in pretty, picturesque villages, we see people living in absolute desperation, struggling to make ends meet. We only have to walk across the road from Parliament, in one of the richest capitals in the world, to see people living in absolute poverty and desperation, too. Surely a fair funding formula would follow that need wherever it exists and be agile enough to make sure that it roots that need out. That speaks to a wider issue about the power balance. Far too much of the relationship is one of dependency of local government on central Government, and the funding regime massively contributes to that. The idea that councils are pitched against each other in a format like “The Hunger Games” is not a healthy relationship; it is not one of an empowered local government and it is certainly not very efficient, so we need to change it.

We know that the underfunding of our rural councils stunts growth, and Labour is prepared to sow the seeds of transferring power, so that our rural councils can determine their own fate. What should that look like? It is about local communities deciding for themselves what is right for their area; it is not about Ministers and civil servants in Whitehall, who are often miles away from the real impact. More than that, that new-found partnership with rural communities comes from a mission-led Government; a Government with a purpose, and a determination to see that purpose through.

We want our rural communities to have higher growth, to end the cost of living crisis, to have an NHS that is fit for the future, to have community energy where people have a stake in the future and where we all have energy security, and, of course, to have safer streets, with a commitment to have a further 13,000 police officers, many of whom will be deployed in our rural and coastal communities to tackle crime hotspots, where they exist. We also want our rural communities to have more opportunities for young people in schools in our rural communities, and we have heard much about that today and about how, in many ways, that actually goes beyond local government to the classroom, the local GP and to whether there is a bus service in place at all. That is a partnership that councils will have under a Labour Government.

We have heard a lot about Labour’s plans, our mission-led Government and what we want to do. We do not hear as much about a comprehensive plan from the Government, which I hope we hear in the Minister’s response today. It is a matter of fact that after nearly 14 years of austerity, the system is creaking to the point of being broken.

I thank the hon. Member for his apology for being late; it is accepted. Does he agree that we should not be fooled that Labour cares about rural Britain? Where are they? The Labour Benches are empty. Not one single Labour MP was in this room when I started my debate. I say respectfully to the hon. Gentleman that I have sat here and listened to a lot of what he has had to say, and I am afraid the realities are that the current mechanisms benefit Labour areas far better than they do Conservative, or indeed Liberal Democrat, rural areas. I say respectfully to him that I think some of the points he is making are not well-founded.

If I can say so respectfully, that was a slightly cheeky intervention. The hon. Gentleman may well find that the Opposition Benches are populated by far more Labour rural MPs after the election. I also draw his attention to the Co-operative party rural commission report, in which I suspect there is a lot of common ground. Outside of the politics, the back-and-forth, and the rest of it, I find that we agree more than we disagree on the fundamental issues affecting rural and coastal communities at these times.

It is a pleasure to serve under your chairmanship, Mrs Latham. Time is limited, so I will try to canter through as much as I can.

A number of colleagues have raised important technical questions, and if I do not address them, please forgive me. I will certainly write to my hon. Friend the Member for West Dorset (Chris Loder) and, with his permission, circulate our reply to those who have attended today’s debate. I think that is only fair.

I must tell my hon. Friend the Member for Rutland and Melton (Alicia Kearns) that it was on the proviso of being hunted by her that I accepted this position. That was one of my key asks, and I look forward to the chase. She referenced the work of Onward, and of course I would be more than happy to meet her and the authors of that report to discuss it still further.

I thank my hon. Friend and constituency neighbour the Member for West Dorset for initiating this debate. Since entering the Commons in 2019, he has spoken with huge passion and knowledge about the challenges and tribulations that face councillors and officers in our rural areas, as well as the opportunities available to them. He and I could dilate for about 14 hours on the challenges facing Dorset; it would be of enormous fascination to us, but less so, I suggest, to the wider House. I know that others also face the issues we face in our county. Whether it is helpful or not, I should say that before becoming an MP I served as a rural district councillor and also county councillor, so I understand at first hand some of the issues discussed today.

I welcome the Opposition spokesman, the hon. Member for Oldham West and Royton (Jim McMahon), who referenced our joint working on the LGA. It was a shame when he had to step aside from Front-Bench duties; it is great to see him back to full health and I look forward to him shadowing me for many, many years to come.

My hon. Friend the Member for West Dorset mentioned the great contest between Sherborne and Shaftesbury to take place later this afternoon; all I can say to him is that I am sure that Sherborne will be a graceful runner-up.

Let us see.

Let me turn to some of the points that were made in the debate. Although levelling up is often portrayed in the media—and, indeed, sometimes in this place—as being something that is solely about the industrial north and midlands constituencies, it is not. There are strategies in place for coastal and for rural levelling up. As a one nation Conservative, I could support nothing other than that. We have to have policies that are of benefit to all our people, irrespective of where they live.

[James Gray in the Chair]

Will my hon. Friend forgive me for not giving way? I am really short of time and want to try to cover as much territory as I can.

Let me turn to some of the principal points. With regard to formula reform, if my hon. Friend the Member for West Dorset looks at my last question from the Back Benches to our right hon. Friend the Prime Minister and at my contribution to the debate on the King’s Speech, he will recall that I made precisely that point. It is a point that he, I, most people present and others have made throughout our time here: the formula needs reform. My hunch is that we could have done it, and probably would have done it, immediately after the 2019 general election, but along came our old friend covid. As desirable as a fundamental review of the formula would be, I do not believe that trying to ask councillors and their officers, who rose magnificently to the challenge of meeting local demand during the crisis of covid, to turn bandwidth, support and attention towards thinking about solutions to formula questions would have been the right thing to do.

We need to reform the formula, as is recognised, but I suggest to my hon. Friend that now is not the right time. In this settlement, we will have to play the hand of cards we are dealt under the rubric of the formula as it currently exists. I fundamentally agree with the Opposition spokesman and others that this should never be a job of robbing Peter to pay Paul. There are acute and identified needs for service delivery due to geography and sparsity in our rural areas, but there are also acute needs in our urban areas. Deprivation is deprivation; it merely manifests itself in different quantums and different varieties in urban and rural settings.

The Opposition spokesman is absolutely right to say that we do not want some sort of bidding war or competition. Where our people are in need and have a legitimate aspiration for the delivery of quality and reliable services, they should be delivered in a cost-effective way, irrespective of where one lives. If deprivation, poverty and need are blind, so must be those who provide services and the formulas that generate the cash to be able to do so.

We know that rural services are key. We also know, as a matter of indisputable fact, that by definition their delivery costs are higher, partly, although not exclusively, due to both sparsity and geography. [Interruption.] Mr Gray, I have been directing my remarks to Mrs Latham, having not realised that the Chair had changed. My apologies, Sir, if you have taken the Chair and I have transitioned you into something that you did not wish to be.

I take the point about the challenges of an ageing population, home-to-school transport and SEND. All have high demands and all have an irrepressible trajectory, which is why it is so important that His Majesty’s Government do not view these things in silos or, indeed, in isolation. It requires collaboration and close working between my Department, the Department for Education, sometimes the Home Office when it comes to police and fire services, and, arguably most importantly, the Department of Health and Social Care as it relates to the delivery of social care for some of the most needy and vulnerable in our communities. I am lucky that the Department and I have an excellent relationship with those Departments. Conversations are ongoing, and we will work as closely as we can—not out of turf warfare or some sort of testosterone-driven competition whereby people say, “My Department is better than yours,” but focused solely and singularly on how best to use taxpayers’ money to help councils to deliver the services they require.

As Members have mentioned, councils have done the most fantastic work in meeting funding challenges. They have shared back-of-house functions and delivered shared services, and combined authorities have come together to create unitaries, as we did in Dorset. As a result of going unitary—it has not been without problems; let us not be false about that—there have been massive savings and no cuts to any of the services that are delivered to our people by Dorset Council. We have to salute the ingenuity of councillors and their officers, who work tirelessly to meet contemporary needs in challenging times.

I have to say to the hon. Member for Tiverton and Honiton (Richard Foord) that I am sure his constituents will be fantastically interested in what he said: I was perplexed to hear that councils should be precluded from the delivery of housing in their areas. Many councils ask us to allow them to build social rented properties, affordable housing and the like. I noted his comments with interest, and I am sure his constituents will note them with alarm.

As I say, we should not take the concerns in our rural areas personally, because I hear exactly the same calls for additional funding, changes to the formula, other reviews—