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Rural Councils: Funding
29 November 2023
Lead MP
Chris Loder
Responding Minister
Simon Hoare
Tags
EconomyTaxationEnergyBusiness & TradeChildren & FamiliesLocal Government
Word Count: 13464
Other Contributors: 13
At a Glance
Chris Loder raised concerns about rural councils: funding in Westminster Hall. A government minister responded.
Key Requests to Government:
Loder called on the Minister to investigate discrepancies like £166 million going to five London boroughs alone despite a supposedly fair funding formula. He urged for fundamental reform of the frozen funding formulas to address the financial difficulties rural councils face, ensuring that fairness is realised and preventing further cuts in essential services.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Opened the debate
Chris Loder highlighted the funding challenges faced by rural councils in England, noting that ten million people live in rural areas where residents earn on average £2,000 less than those in urban areas and face a double national average for fuel poverty. He mentioned that rural council tax is 20% higher per head compared to urban areas, with Dorset Council receiving just £700,000 from central Government funding, which accounts for only 0.2%. Loder also discussed the issue of business rates and social care precepts, noting disparities between rural and urban councils such as London boroughs receiving far more in grants.
Alicia Kearns
Con
Rutland and Stamford
Recognises that London councils receive exaggerated funding and make millions more on parking fines, which they reinvest into their communities. This factor is not taken into consideration in the basic figures. Ms. Kearns highlighted the severe underfunding of rural councils in Leicestershire and Lincolnshire, citing specific financial discrepancies compared to more affluent counties like Surrey. She also pointed out that due to budget constraints, crucial infrastructure projects such as a bypass are being compromised. Additionally, she mentioned Rutland County Council's high council tax rates relative to the low social mobility index of the region. Cited the work of Onward and referenced her colleague's key asks, expressing readiness for further discussions on rural levelling up strategies.
Newton Abbot
Ms Morris highlighted the underfunding of rural areas, with 21% of the population living in such regions. She criticised the Government's funding shift from central grants to council tax and business rates, which has led to a continuous decline in local government budgets. She mentioned a primary school considering laying off six teachers and a village suffering from flood damage without adequate funds for repairs or prevention measures. Ms Morris called for a fair distribution of resources between urban and rural areas. Will the Minister give way?
In Cornwall, SEND children receive just over half per child what those in Camden receive, highlighting the funding disparity between rural and urban areas.
Derek Thomas
Con
St Ives
I pressed the Minister to ensure that the 2024-25 local government finance settlement is fairer for local authorities, particularly in rural areas. Urban councils receive 38% more per head in Government-funded spending power than rural councils and rural residents will get 13% less per head in social care support.
Gavin Williamson
Con
Stone, Great Wyrley and Penkridge
He noted that local authorities could deliver better road improvements if they had a three or four-year plan with assured funding, which would reassure residents and allow for more efficient use of resources.
Jamie Stone
Lib Dem
Caithness, Sutherland and Easter Ross
Mr Jamie Stone highlighted the challenges faced by the Highland Council in Scotland due to a council tax freeze imposed by the Scottish Government. The freeze required the council to find £108 million in savings over three years, equivalent to more than half of its annual education budget. He warned that such cuts amount to 'levelling down' and undermine efforts towards levelling up. Mr Stone called on the UK Treasury to reconsider the Scottish Government settlement when it impacts rural constituents negatively.
Jim McMahon
Lab Co-op
Oldham West, Chadderton and Royton
Councils are at the frontline of public service delivery but have borne a disproportionate burden of cuts since 2010. The rural service delivery grant was introduced without new money, shifting funds without assessing needs properly. There is no evidence-based approach to how councils are funded, resulting in an unsustainable system that disadvantages communities and leads to financial viability issues for town centres. Supported the idea that levelling up policies should not be seen as exclusive to industrial northern or midlands constituencies, advocating against a bidding war for funding among different areas.
Tewkesbury
Tewkesbury Borough Council has been financially responsible but is penalised for not borrowing and keeping spending low. The speaker calls for a fairer allocation of Government funding rather than increased spending, highlighting issues in school funding, planning delays due to underfunding, the need for proper accommodation for asylum seekers, and lack of rural transport.
Richard Foord
Lib Dem
Honiton and Sidmouth
Local councils in Devon are struggling due to a 31% fall in grant income over the past years, with some like Mid Devon District Council receiving less than half of what they did in 2015-16. The lack of multi-year settlements from central government forces councils into one or two-year planning horizons, impacting their ability to provide long-term certainty for services such as social care. Councils are being encouraged to be enterprising but some have faced failures, like Mid Devon's housing development company 3 Rivers Developments.
Sarah Dyke
Lib Dem
Glastonbury and Somerton
Ms Dyke highlighted the difficulties faced by Somerset Council, noting a £100 million budget shortfall with significant overspending in social care. She mentioned that rural residents receive 13% less funding per head compared to urban areas, while council tax increases are more impactful in rural regions due to lower population density. She called for an end to the freeze on council tax and criticised the previous Conservative government's policies which led to a £150 million cut in services from 2010 to 2017. Ms Dyke urged the Minister to ensure fair funding for local authorities, particularly rural ones.
Steve Shield
Sherborne Town Clerk
He was warmly welcomed by Chris Loder as a finalist for star council awards.
Therese Coffey
Con
Suffolk Coastal
She congratulated the hon. Member for West Dorset on his speech and discussed Suffolk County Council's innovative approach to managing financial challenges, highlighting concerns about rising costs associated with special educational needs, home-to-school transport, and the national living wage increase of 9.6%. She also mentioned the need for the funding formula to reflect rural challenges.
Tim Farron
Lib Dem
Westmorland and Lonsdale
The MP highlighted the inadequate funding for rural councils, noting that Westmorland and Furness Council serves an area with 227,000 residents but experiences over 20 million visitors annually. He pointed out the disparity in central government funding per person between urban and rural areas, stressing the impact of second homes on local finances and calling for Government approval to double council tax for such properties from April 2024. The MP also discussed social care inadequacies and transport poverty, urging devolution powers for rural communities.
Government Response
Simon Hoare
Government Response
Acknowledged the importance of levelling up policies for rural areas and expressed support for reforming the funding formula. Emphasised the need to address challenges collaboratively between departments, such as those related to an ageing population, home-to-school transport, and special educational needs (SEND). Pledged ongoing efforts to work closely with other government departments to use taxpayers' money effectively in delivering necessary services.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.