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Rural Upper-tier Local Authorities — [Paula Barker in the Chair]
02 September 2026
Lead MP
Helen Morgan
Responding Minister
Jim McMahon
Tags
Social CareEconomyTaxationHousingBusiness & TradeAgriculture & Rural AffairsChildren & FamiliesLocal Government
Word Count: 12476
Other Contributors: 12
At a Glance
Helen Morgan raised concerns about rural upper-tier local authorities — [paula barker in the chair] in Westminster Hall. A government minister responded.
Key Requests to Government:
Morgan calls for clarity on the plan to ensure that the powers needed to turn around rural areas and the resources to go with them are firmly in place. She asks the Government to address the unfairness of underfunding rural councils, which perpetuates rural deprivation and limits opportunities for young people in rural areas.
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
Helen Morgan is extremely worried about the widening gap in opportunity, social mobility, and economic growth between rural and urban areas. She highlighted that rural areas are underfunded and overstretched, with social care costs increasing by 5.8% annually. Shropshire council faces a significant financial challenge, with 80% of its budget spent on social care and a 21% increase in education, health, and care plans. She also noted that the Council's funding is projected to fall below 90% of 2024 funding by 2028, while the national average is set to rise to around 118%. She mentioned a case of homelessness where a young man was living in his grandfather's shed, indicating hidden rural deprivation.
Caroline Voaden
Con
Newcastle-under-Lyme
I am concerned about the rural-urban divide and the impact of Government policies on rural communities. Incomes are lower, jobs are seasonal and low-waged, and there is often no public transport. Healthcare services have been cut, broadband connectivity lags behind urban areas, and there is a housing affordability crisis due to high house prices and low wages. Six rural upper-tier local authorities are on the brink of bankruptcy. The new local government finance settlement does not provide adequate support for rural councils, leading to service reductions and higher council tax rates. The proposed local government reorganisation in Devon will leave rural communities struggling for economic growth and regeneration. I urge the Minister to review the funding formula and consider alternative options for local government reorganisation. Questioned the Minister about the discrepancy between the area cost adjustment and the loss of £14 million by Devon county council due to the removal of the rural services delivery grant.
Edward Morello
Con
West Dorset
Edward Morello highlighted the challenges faced by rural communities in Dorset, such as difficulty in accessing services, an ageing population, and increased costs for home-to-school transport for children with special educational needs. He pointed out that the cost of providing such transport has risen by 33% since 2016-17. Morello also noted the significant decline in bus frequency in West Dorset and the need for the funding formula to recognise rurality, population age, and accessibility needs. He suggested that the Government should meet the Wessex Partnership to discuss devolution for the region.
Jayne Kirkham
Con
St Ives
Cornwall, a large unitary authority, faces unique challenges such as third-tier council conduct issues and a lack of external funding recognition. The council withdrew from many services during austerity, leading third-tier councils to take over, yet face significant financial disparities among residents. Devolution has brought some benefits, including public transport franchising and housing partnerships, but financial pressures persist due to higher costs in rural areas and the loss of EU funding. She proposed measures like an overnight visitor levy to manage service demands during peak tourist seasons.
Jim Shannon
DUP
Strangford
Jim Shannon highlighted the challenges faced by rural communities due to insufficient funding, noting that England's largest councils receive just 2p for every £1 of rising costs over the next three years, leading to an estimated £11 billion funding gap. He emphasised the importance of recognising the additional costs of delivering services in sparsely populated areas and called for the reinstatement of 'remoteness' in the funding formula. Shannon also provided a Northern Ireland perspective, discussing similar challenges faced by rural councils there, including the potential closure of youth forums due to funding difficulties. He mentioned the success of the Ards and North Down rural partnership and questioned whether the Government would continue to support such initiatives.
John Milne
Con
John Milne questioned the effectiveness of the Government's rebuilt local government funding formula and devolution agenda, arguing that it fails to account for the unique challenges of rural areas. He cited research showing rural residents paying 70% more council tax per head than urban residents despite lower wages. He highlighted that the business rates retention model piloted in Greater Manchester may not work in rural areas. Milne also pointed out that councils, especially West Sussex, are struggling with large debts and that the current funding formula risks forcing further cuts on services. He suggested that the Government should use 2025 data consistently and reinstate the remoteness indicator across the entire funding formula.
Lewis Cocking
Con
Hertford and Stevenage
Commended the hon. Member for North Shropshire for securing the debate and highlighted the challenges faced by rural communities due to the unfair funding review and top-down local government reorganisation. Pointed out that Hertfordshire faces a reduction in funding of around £50 million a year and criticised the Government for ignoring rural areas.
Noah Law
Lab
Falmouth and Camborne
He agrees with the hon. Lady that the issues in Shropshire are similar to those in Cornwall. He sees the move to a mayoral share of income tax as an opportunity to reset the funding model, not a detriment to non-mayoral areas. He suggests turning off funding taps for mayoral regions and redirecting them to rural areas like Cornwall. Asked the hon. Member if they recalled the budget slashing of Cornwall council under the Conservative and Liberal Democrat coalition Government.
Olly Glover
Lab
Oxford West and Abingdon
Olly Glover highlighted the funding challenges faced by Oxfordshire county council, particularly in highway maintenance. He noted that the council invests significantly more than it receives from the Government, with a current maintenance funding shortfall of £16 million per year. Glover also mentioned a maintenance backlog of over £700 million and raised concerns about the impact of Government funding cuts on the council's ability to maintain and improve roads. He emphasised the need for a new funding formula that accounts for the unique challenges of rural areas and the importance of proactive maintenance to prevent further deterioration.
Perran Moon
Lab
Falmouth and Camborne
Cornwall is the 11th lowest funded of 151 local authorities in the UK, with a significant rise in the number of pupils with an EHCP, leading to longer delays in issuing EHCPs. The council's expenditure on home-to-school transport has increased by nearly 300% over the past seven years, and the average weekly wages in Camborne, Redruth and Hayle are nearly £100 less than the national average, with child poverty at 35%. The costs of being remote and coastal are not fully reflected in funding models. Inquired why Opposition Members were not present to make points about the local government reorganisation. Addressed the Minister regarding the conflation of devolution and the local government funding settlement, suggesting that local councils in deprived areas have to get funding from non-traditional sources to supplement services.
Rachel Gilmour
Con
Tiverton and Honiton
Rachel Gilmour supported John Milne's argument, highlighting that the part of her constituency in Devon, which is 800 square miles, will form part of a large rural authority that may lack the fiscal power to sustain itself.
Intervened to highlight the challenges of maintaining roads in Devon, noting that partitioning Exeter could strip the tax base from the rural Devon hinterland, impacting service provision.
Terry Jermy
Con
Norfolk North
Emphasised the disparities between urban and rural upper-tier councils, noting that Norfolk faces higher costs and limited investment for economic growth. Called for stronger rural sparsity components in local government settlements and sufficient funding for local government reorganisation.
Government Response
Jim McMahon
Government Response
It is a pleasure to serve under your chairmanship, Mrs Barker, and to hear the debate and the passion that Members have for their areas. I quite liked the county competition for the most beautiful part of England, but I am sure that we can agree that England is magnificent coast to coast, and we should all celebrate that. I will respond to the debate in due course, but I want to start by laying out some of the differences. We are using common language for things that are very different; I think that we are conflating devolution and the powers that will be devolved with the fair funding review and the funding that goes to local authorities. In some cases, there is no clarity on what a regional authority will do to the local authority and community governance, whether that is neighbourhood governance or town and parish councils. In this debate, it has become one and the same. I do not criticise that, and I recognise why that happens. We are all here to represent places and not units of government, so we care about whether our communities are getting the resources needed. In a sense, I recognise that there will be differences of opinion, depending on which local authority and what part of the country Members represent, about whether the fair funding review fully picks up all the particular circumstances. There might be more agreement on the sufficiency of local government finance. Whatever the allocation across the board, the fair funding review is intended to distribute it in the fairest possible way and in a transparent way, so that Members and councillors can see where the money is going to. Since coming to power, the Labour Government have delivered long-overdue reforms to council funding through the first multi-year local government settlement in a decade. In doing so, we have delivered transformational changes to how councils are funded, which the public, our local government partners and Parliament have long called for. We have delivered on our commitment to give councils greater certainty and flexibility over their funding, ensuring that resources are fairly aligned to local need and simplifying the funding landscape by ending wasteful competitive bidding, which we all recognise pits one area against another. The Government also have a very important role to play as an equaliser for local government income. During the course of the debate, I heard references to the amount of grant that individual councils get, and one grant total being compared with another. I want to be clear that the fair funding review is not intended to give every council the same central Government grant. That grant is intended to act as an equaliser for the system, so that in the end all councils have the resources to deliver the public service need in their local areas, while recognising that there are wide differences in England in the local tax bases of council tax and business rates. As a result of our reforms, nine in 10 councils will receive funding that broadly matches their assessed relative need by the end of the multi-year settlement, up by about a third before the reforms. We recognise the different drivers in demand for services, the cost of providing them in different places and the different abilities of areas to raise council tax. We are therefore making funding available in such a way as to enable all local authorities to provide the same level of services to their residents. For rural communities, the 2026-27 settlement was a key step in delivering a fairer system to address the issues that matter to local communities across England. It included recognising local circumstances, including differences in the cost of delivering services between rural and urban areas, and using the best available and most up-to-date data, including the latest indices of multiple deprivation to ensure that deprivation in rural areas is captured accurately. I heard references to the fair funding review not taking account of the differential cost of delivering services in rural areas. To be clear, we account for rural costs through the area cost adjustment, which is applied to all formulas. That adjustment captures the variation in wages, property rates, journey times, and a range of other factors that pick up the local variation that takes place. On top of that, we have a remoteness adjustment in social care. I hear representations that say, "Hang on. If it costs more to deliver adult social care in these areas, then surely children's services and other services such as waste collection and other things ought to be included, too." The area cost adjustment picks up that general difference of delivering a service in those areas. There is a balance here. We want a simplified system that can be scrutinised and understood. The more we adapt and change and really drill down on that, the more complicated it becomes, the more that it has to be updated and the more that changes. There is always a balance to be had between simplicity, being understood and giving certainty over the multi-year settlement, while recognising the differences at a local level. We have always taken the view that the rural services delivery grant had, to put it mildly, a weak evidence base to support it. A political decision was made when the coalition Government came in and the grant that was given to largely urban authorities was taken away with almost no notice at all. It was replaced by the rural services delivery grant, but without the evidence base to support where it went to. Whatever criticism is applied to the fair funding review, what cannot be criticised is the evidence base that sits beneath it, because it is the best available data. We are laying the foundations for reform more broadly. The multi-year local government finance settlement allows for £4.6 billion of additional funding to be available for adult social care in 2028-29, compared with 2025-26, including £500 million for the first ever fair pay agreement. The Government are driving the biggest transformation in children's social care in a generation, with the families first partnership programme backed by nearly £3 billion of investment over four years, including a historic £2.4 billion over the multi-year settlement. That will support local authorities, police and health partners to provide families with the right support at the right time, shifting the system from expensive statutory provision to early intervention and prevention services. The Government recognise that the current SEND system is not working for families, children or local authorities, and we have set out plans to reform it, backed by £4 billion of investment over three years, to deliver expertise without the need for statutory processes and embed new practice into the system. We have also heard calls for a solution to SEND deficits. All local authorities with a deficit will receive a grant covering 90% of their high needs-related deficit. The grant is projected to be worth more than £5 billion nationally, and is subject to each local authority submitting and securing approval for a local SEND reform plan. We recognise the spending pressures from home-to-school transport in recent years, particularly in rural areas. At the fair funding review, we introduced a bespoke home-to-school transport formula that estimates local transport need for pre-16 home-to-school transport, based on pupil numbers and home-to-school distances. Furthermore, following consultation on the design of the formula, the Government increased the distance cap to 50 miles, rather than the originally proposed 20 miles. That change will see only 0.4% of pupil journey distances capped and will avoid unfairly penalising local authorities where children travel further to get to school. We know that the cost of living and homelessness services are causing challenges too, and that homelessness can present in a unique way in rural areas. That is why we are providing more than £4 billion of funding for homelessness and rough sleeping services over the next three years, including £442 million launched last month, with new flexibility for areas to shape services to meet local need. The Government are committed to making the changes necessary to transform public services and put local government back on its feet. Realigning funding with need and reforming the services that put pressure on local government will empower local leaders to deliver for their communities in rural areas and right across the country, as we have promised. Devolution is a live issue for Cornish colleagues and those from other places. I give credit to Members for their representations on behalf of Cornwall and other areas. The truth is that devolution can happen only with local consent. We need areas to come forward, get local partnerships in place, and rally the support of local authorities. At a time of change in local government, when areas are also dealing with local government reorganisation, there is a lot for them to step up to. That is why we have provided support for local government reorganisation areas, as I covered in another Westminster Hall debate this week. We want devolution to be rolled out to every area, but we recognise that the local partnerships in different areas are at different stages. There is an active discussion, which we should welcome, about what the role of community and neighbourhoods ought to be in the new settlement—devolution should go hand in hand with localism and empowerment—what the role of the local authority is, and what added value above and beyond that can be achieved if areas choose a mayoral model. To be clear, if an area is not ready yet for a mayoral model, the position is not that they cannot have devolution and that more cannot be given. I hope Members and people in local government continue to do what they have always done: rally their local areas.
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