That this House has considered council tax and the distribution of the revenue support grant.
It is a pleasure to serve under your chairmanship today, Sir Mark. I thank other Members, and indeed the Minister and my hon. Friend the Member for Loughborough (Jane Hunt), for attending.
People who live in Dorset currently pay over two and a half times more council tax on an average band D property than people who live in London. People of school age living in Dorset, or their parents, will need to pay for their ravel to school or college; meanwhile, in London and other urban areas, that travel is paid for. A third of our community in Dorset is over 65, compared with around 10% of the community in London. In Dorset, 85% of services are provided diligently by the council, and will be funded through council tax, compared with a national average of 50%. Why, then, given the rurality of West Dorset, the demographics of its residents and the challenges we face, do we receive a fraction of the Government support that urban boroughs receive?
The Government have a powerful lever of influence on local government finance and its impact on the tax burden of local residents, and that lever is the revenue support grant, which allows the Government to choose and target which areas of the country to help most. Year after year, the residents of rural West Dorset are continually frustrated that preference is given to urban areas, such as those in the capital, over places such as my constituency. The formula for the revenue support grant is in need of a great deal of scrutiny and reform as part of a wide-scale review of local authority funding.
In West Dorset, we are custodians of picturesque rolling green hills, with livestock grazing and productive arable land, and magnificent landmarks and heritage sites, such as the Cerne Abbas giant and the Jurassic coastline. Yet the people of West Dorset and the wider county face one of the highest rates of council tax in the country. My constituents and those living in neighbouring rural Dorset constituencies pay £2,225 for an average band D property, compared with just £866 in the London Borough of Wandsworth—an enormous difference of £1,359. In short, that means that West Dorset’s council tax is 150% more than Wandsworth’s.
Through diligent financial management, Dorset Council has continued to cut its costs, but many still face high council tax bills. A key reason for that is that the local government funding formula requires urgent reform. In 2019-20, local authorities on average received 50% of their revenue through council tax, alongside 23% from Government grants and 27% from retained business rates. Dorset Council is forced to derive 84% of its revenue from council tax, which itself has increased 12% since 2010-11 and, in 2022-23, totals almost £300 million. In contrast, Wandsworth Borough Council needs only to raise around £70 million in council tax. In previous years, we in Dorset have received zero revenue support grant, compared with a £24 million revenue support grant last year for Wandsworth. We have to ask: is that really fair? [Interruption.]
Order. The sitting is suspended for 15 minutes for a Division in the House. If there are two Divisions, it will be suspended for 25 minutes. I will resume the sitting when Members currently present return to their seats.
I would like to remind Members present that, just before the Division, I was talking about the fairness of the specifics of the Dorset Council revenue support grant. For the past three years, Dorset has received exactly zero revenue support grant. This is the first year since my election that we have received any form of revenue support grant. At a slim £654,000, that equates to roughly 0.2% of total council income. Although welcomed, that has come only after others and I spent a long time banging the drum for the situation to change. I am afraid that it is still overshadowed by the £24 million that, for example, Wandsworth Borough Council and other boroughs receive.
I thank the hon. Gentleman for being such an assiduous MP for his constituency, which he clearly is. He is outlining the pressure caused by the rising cost of living. Councils are finding it increasingly difficult to balance their books, and I believe that Government must consider increasing the grants to ensure that the basic service-level provision is in place—that basic services are maintained, and that the parity of grant that the hon. Gentleman has referred to applies across the whole of the United Kingdom. There is deep privation in the hon. Gentleman’s area: the same is true in other parts of the country.
I agree that deprivation affects all parts of the United Kingdom—not just urban areas, but rural areas as well, and indeed all four nations of the UK.
Despite Dorset benefiting from £654,000 from the revenue support grant, local councillors have made me aware that while we have finally received a positive revenue support grant contribution, other Government grants have been reduced by a broadly similar amount, meaning that the council is little better off in real terms. It is therefore clear that the way in which local government finances and the revenue support grant are calculated and delivered is in need of urgent review. Unlike others, I am not looking for favour or preference for Dorset, or indeed West Dorset, but I am looking for fairness.
The average age in rural Dorset is much higher than almost anywhere else in the UK, with one third of the community aged over 65, compared with an average of 19% in England and just 10% in some London boroughs. That, alongside rising special educational needs and disabilities among young children, means that 69% of Dorset Council’s revenue is spent on social care. Since 2010-11, there has been a 25% rise in the number of those aged between 65 and 84 in Dorset, and a 20% increase in those aged over 85—with, of course, the associated social care needs. Those changing demographics have caused the council’s spending to change dramatically, with net spending on adult social care in Dorset increasing by 15% to £139 million, and children’s social care spending increasing by almost 25% between 2010-11 and 2019-20, reaching over £60 million. However, the fundamental funding structure has still not changed.
Care of adults and children is an obvious council priority, and with internal migration having increased the average age in Dorset, that service has taken up more and more of the council’s budget in recent years. That has resulted in cuts elsewhere: planning, development, culture, environment and regulatory services, and highways and transport have all seen reductions in net spending over the same period to facilitate the priority of adult and child social care. Highways and transport spending has been reduced by more than half over the past 10 years —a fact that is only too evident, as Dorset is also home to the worst frequency rail line in the country, between Yeovil, the county town of Dorchester and Weymouth. At best, there is a train every three hours, if you are lucky.
It is a pleasure to see you in the Chair, Sir Mark. I think I might have caught my daughter’s cold, so forgive me if I am a little hoarse—I wish that the Minister had bought two Lucozades. I congratulate the hon. Member for West Dorset (Chris Loder) on securing the debate and highlighting the regional inequality that his constituents face. That is a reality for many areas across the country.
Council tax is a fraught issue in every part of our country, from Dorset to Durham. Sadly, local communities in rural, urban and suburban areas will have seen their neighbourhoods decline over the last decade while also seeing costs go up. Every household paying their council tax will increasingly feel the strain as we deal with the fallout of the mini-Budget and a looming depression. With the revenue support grant being withdrawn in many areas and rising running costs not being met with adequate funds, council tax seems to be all there is left for local authorities. That is all that they can rely on. As we heard from the hon. Member for West Dorset, more than 80% of local funds are raised through council tax. That is reflected nationally: since 2010, core funding for councils has been reduced by £16 billion, and yet council tax has increased—it has been forced to go up—by over £15 billion. What we see locally is happening nationally.
Following 13 years of relentless, debilitating cuts, councils desperately hoped for respite from the autumn statement, but no such support was provided. Instead, the Government laid more burdens on local authorities by forcing them to take the tough decision on whether to raise council tax further. That was a cop-out—a refusal to own and fix the holes that they have created in our communities. The Chancellor talks—all Chancellors talk—about taking tough decisions, but, to be blunt, they are not taking the tough decisions when it comes to local government. They are instead forcing difficult decisions back on local authorities and local people. After taking 60p from every £1 given to local authorities since 2010, this Government are now pushing councils to charge residents even more money—often for worsening services. That is not sustainable. The Chancellor’s plans to raise council tax in the way he has outlined will bring in an extra £80 per person in Surrey but just £39 per person in Hull.
It is a pleasure to serve under your chairmanship, Sir Mark. I am grateful for the opportunity to respond to the debate. My hon. Friend the Member for West Dorset (Chris Loder) is an extremely vocal and proud champion of his local area in West Dorset. We have already spoken about this issue on a number of occasions in the short time I have been in post. He strongly advocates for his constituency’s position and the importance of rural Britain being heard in debates such as this one. I congratulate him on securing the debate and highlighting important points, even though there was a gap in the middle for other reasons.
This is an important issue, and I accept that. My hon. Friend has outlined some of the points that affect his constituency and the supporting unitary authority. It is important we discuss these issues fairly regularly. There will never be a perfect methodology, and there will never be a single answer for everything. There will always be these necessary discussions, but it is important—I say this as someone who represents a semi-rural area as well—that the voice of rural Britain is heard. He has made that voice heard loud and clear today.
In response to my hon. Friend, I want to talk briefly about the broader situation and then answer a number of the points he raised to the best of my ability in the time we have. His point is both broad and narrow. It is broad in that people should have confidence that the system works for all parts of Britain, broad in that we want a local government settlement that reflects need, and broad in ensuring that all parts of our country get the resources we are able to offer. In the usual way, there is a challenge around the allocation of resources in a system that has infinite and worthy demands on it, but very finite resources to support it.
My hon. Friend also makes a more specific and narrow point about the RSG. He has highlighted how that has changed for a number of areas across the country over a number of years. He has highlighted that Dorset has had, for a number of years, a zero or negligible grant. It has gone up slightly this year.
Order. First, I give permission for Members to remove their jackets if they wish. Secondly, I ask the Minister to address his points through the Chair, rather than with his back to the Chair.
I will do that, Sir Mark. The RSG has been in place since the late 1980s. It has been a feature of the financial and settlement landscapes for a number of years. But, as my hon. Friend the Member for West Dorset has indicated, the utility of the RSG and the way in which it is applied to individual areas, such as Dorset and elsewhere, has changed over recent years. That is to be expected as the local government funding landscape changes over a 20 or 30-year period.
That plays out within the context of a broader settlement, and in order to have these kinds of conversations we have to acknowledge what is within that broader settlement—not just the RSG but all the other grants, and the overall envelope within which it is offered. While I absolutely accept that there are a significant set of challenges at the moment, I hope the sector has recognised—in my experience from speaking with the sector, from unitary councils and districts to county and metropolitan boroughs, it has done—that a significant amount of money has gone into it. While there is still a challenge with inflation, it looks like £60 billion-worth of taxpayer subsidy, in one shape or form, in England will be allocated in the provisional local government finance settlement that was announced for consultation before Christmas. We will make decisions and finalise that for the sector shortly.
That figure represents a significant increase across all councils. We have also provided additional clarity about what is likely to come in the financial year 2024-25, which has been a long-standing request of the sector, irrespective of the way in which it funds its individual services. That has been welcomed by the sector, and I hope we can build on it in future years, once we are through the current spending review period.
Although it has tended to be more relevant for non-unitary councils than unitary councils, we have also given a one-off funding guarantee that meant the provisional settlement contained a floor that ensured that individual councils were able to obtain some uplift prior to deciding what they wished to do or not do about council tax. The hon. Member for Strangford (Jim Shannon) is no longer in his place, but he raised an important point about his concerns regarding local government finance. I hope that with the provisional settlement and the clarity that we will provide shortly with the financial settlement, we have demonstrated our willingness to respond where we are able.
I appreciate that, between the Minister’s constituency and mine, there is an £800 difference in council tax at a band D level, so the issues that my constituents face are very much as he is kindly outlining. However, even if we take away the urban areas, which I used as a comparator, there is a level of disparity—his constituency and mine are not totally dissimilar, but there is a clear disparity. We welcome many people to retire in West Dorset, and indeed across the whole county and the whole south-west. That means that local councils often have to bear much greater financial responsibility for social care, but that is not reflected in the financial machinery we have today. From what the Minister said, and from my understanding of the process, there is not really a way to take that into account. Are the Government doing anything to give us some hope that we will have a better machinery in due course to take it into account?
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Buses have also been impacted, with Dorset Council having to spend its already tightening pool of transport resources on taking over vital community service routes from commercial operators that have pulled out. While concessionary bus passes appear good, they result in operators receiving 92p from a £6.50 single fare. That makes many routes commercially unviable and, paradoxically, reduces bus services in rural Dorset, which cuts off elderly communities from essential health and community services—the very groups of people who are meant to benefit from those concessionary passes. The young in West Dorset are also impacted by the inequalities in funding for transport. While I recognise that transport provision is often the responsibility of the Department for Transport, I am bringing up this issue today because of the situation we are in with the allocation of local government funding. Children throughout London enjoy the perks of free bus and tram travel to go to school or see their friends, but the parents of children in West Dorset are faced with financial obstacles. Some school bus passes cost over £600—and that is just for their child’s daily travel to and from their place of learning at sixth form or college.
A 17-year-old living in Dorset will have to find a way to pay to get to their sixth form college or apprenticeship. A 17-year-old living in a London borough will not, thanks to the 16-18 bus pass, which is included in the funding for London. It is also worth noting that per passenger journey in London, TfL receives 10 times the amount of public funding than we do in Dorset. This refusal to give Dorset its fair share, according to its population and characteristics, is pushing the elderly into increasing isolation. That is an increasing concern for me as their MP.
It also places obstacles in the way of our bright, young minds, all while residents and small businesses continue to buckle under the ever-high rates of council tax. It is time that Dorset received its fair share of Government investment and funding and that my hon. Friend the Minister and his colleagues show that the south-west is just as important to the levelling-up agenda as the north-east or indeed other parts of the United Kingdom. The need for funding is especially pronounced following the impacts of the covid-19 pandemic, during which, I am afraid to say, we lost some 20% of our businesses.
A very topical subject being debated around the country is funding for emergency services. Here, too, we see the detrimental impact that the Government’s failure to treat Dorset fairly is still having. My constituency and those surrounding it continue to face the difficult blight of county lines drugs gangs. Dorset Police’s resources are pushed to breaking point during the summer months, especially when the county’s population trebles with holidaymakers and day trippers. Dorset is the sixth-most popular region in the country for visitor trips during the summer, but these can sometimes stretch police resources. I understand that the Minister cannot answer for the Home Office, but I would like him to note this difficulty that we face.
I recognise that these policing matters sit with the Home Office, but I wonder whether my hon. Friend would consider the points I raised at the beginning of the debate. I will refresh everyone’s memory on what those are. Why is levelling up not focused on rural areas in the same way as urban areas? Why does rural hardship not seem to matter in the same way that urban poverty does? Why does Dorset Council have to raise 85% of its funds through council tax, when the national average is 50% and even less in some urban locations? Why is it deemed acceptable to put financial obstacles in the way of access to rural education but to remove them for urban education?
Why does Transport for London get £1.7 billion of Government money when needed, yet Dorset Council gets hardly anything? Why, despite known patterns of domestic migration, is the cost burden of rural social care placed on the local community, whereas other communities can get help? Why does Dorset receive such low levels of the revenue support grant, whereas in inner London there are boroughs that charge very low rates of council tax comparatively and are furnished with tens of millions of pounds in Government grants?
In short, it is my intention with this debate for the House to consider two central points. The first is that rural Britain, and specifically rural Dorset and my constituency of West Dorset, should finally receive its fair share of Government local authority support. For too long, Dorset has been overlooked in the allocation of RSG payments, and for too long council tax has had to cover the deficit. It is time that services in Dorset had adequate funding, so that they can continue to support rural and coastal communities in the way they need to. Finally, as I continue to champion relentlessly the needs of West Dorset and advocate for fairness across the board, I believe that the Government need to examine the whole system of revenue support grants, and that there is a need for reform so that local authorities such as Dorset Council receive their fair share of Government funding and support to enable us to thrive.
Some have misunderstood levelling up or seen it as a bit of an empty slogan. Has it now come to mean that we are just creating greater economic divides than those that existed before? The hon. Member for West Dorset talked about rural areas perhaps not faring as well as everywhere else in levelling-up fund bids. I have asked before about the transparency over how levelling-up funding bids are allocated. Local authorities have not been told why they have been unsuccessful. As Ministers will know, MP after MP stands up in the Chamber or Westminster Hall to ask for their bids to be looked upon favourably, or to talk about how successful the bids are or where they are in the process. If we had a transparent process, we would know more, and local authorities and local areas could put in stronger bids. We need to end the cycle of beauty pageant crossed with Hunger Games-style bidding wars, which pits area against area, community against community and project against project, with no guaranteed outcome and without even tackling regional inequality. Instead, Labour would trust local areas and move towards longer-term funding settlements for councils and communities to use according to their priorities and make genuine long-term efficiency savings as they can better plan for the future.
After service after service has been cut, it is clear that local funds do not meet those needs. The hon. Member for Strangford (Jim Shannon), who is not in his place now, talked about demand outstripping supply and resources in local areas. We have seen councils’ desperate need to revive their youth provision or deal with increased levels of antisocial behaviour. Yet the funding does not make a dent in the amount needed to restore our crumbling high streets, prevent library closures or save local nurseries, and we all know it does not come anywhere close to plugging the gaps in the ailing, failing adult social care sector.
As has been stated, the hon. Member for West Dorset represents a rural constituency with a higher than average number of older residents, and that necessarily means higher demands on adult social care. I am sure he will appreciate that pouring more local taxpayers’ money into a broken care system is just not sustainable. Private companies are making huge profits off children in care and through contracts with local authorities that have been stretched so thin that they can no longer directly provide the services that are needed. There has to be another way.
I worked as a care worker. I know the hard graft, the long hours and the low pay, and I know the conflicting demands. Those who had funding support and those who paid privately were pitted against each other—often for minutes—regardless of need. The Government cannot continue to ignore the dereliction of this sector forever. Even the current Chancellor acknowledged when he was Chair of the Health and Social Care Committee that that was not sustainable. When the funding comes, it will be just another sticking plaster and will come nowhere close to healing the wounds of more than a decade of neglect of social care, as well as rising demand. Constituencies such as mine and that of the hon. Member for West Dorset are varied in their demographics and geography but alike in their need for stable, adequate funding. I sincerely hope the Minister can answer some of the questions that have been put to him today.
That is all within an extremely challenging global financial context, which we all know about, even if those on either side of the House disagree in part on the reasons for it. That is all down to challenges that were discussed at the Budget and that have been visible for a number of years—both within the immediate post-covid era and stretching back longer—across many western democracies as debt has risen, as the recovery from the global financial crisis has been attempted and as we seek to accommodate spending decisions that were made a number of years or decades ago, which still have overhang even now. We have to contextualise decisions about the financial settlement as a whole, which will hopefully be finalised soon, and how it is distributed within the very challenging financial context.
My hon. Friend the Member for West Dorset talked powerfully about the particular pressures on children’s services and adult social care, and he is absolutely right to highlight that there have been significantly increasing challenges around both those areas in the last decade or so. That is not unique to Dorset, but is absolutely the case in all other councils, as the hon. Member for Luton North (Sarah Owen) highlighted from the Opposition Front Bench when she spoke of her own experiences of adult social care.
That has been recognised in the last number of years of the financial settlement with the creation of, and then increased funding for, grants earmarked for adult social care and children’s care, including the social care grant. Over recent weeks, we have seen an additional amount made available for adult social care through the discharge fund, of which at least a portion will go through local authorities to support additional social care provision within individual localities, to help the NHS get through the winter challenges. My hon. Friend will probably also be aware of the market sustainability and improvement fund, which is due to come in in the next financial year. So there has been a response to the increasing pressures, and one that reflects greater linearity between grants that are provided by the centre and the challenges and pressures that individual authorities are facing. I hope that that further additional context is helpful.
My hon. Friend talked powerfully and at length about the specific aspects of rural funding. He made a strong point, and I will absolutely consider it more. As he will be aware, councils that have a significant proportion of rurality have already received additional funds through the rural services grant over the last few years. As part of the provisional settlement, we confirmed that that will continue in the coming years. I know that there is a debate about the quantum of that grant, but we have sought to do that. Within the funding formulas for other grants, there is a recognition of need, irrespective of rurality. As my hon. Friend rightly indicated, need is not necessarily related only to urban areas, but is also present in rural areas. I hope that, at least in part, the overall funding settlement is able to reflect that.
I want to talk about three points that my hon. Friend raised—I am not sure he will fully agree with me, but I want to touch on each of them. He made a number of points about the difference, both perceived and actual, between how different parts of the country and different authorities allocate their resources, and about the different funding that comes to different parts of the country, both in terms of what is provided centrally and what is raised. He highlighted a differential between London and other parts of the country, and that is returned to regularly. As somebody who was a councillor in London for eight years and who is now happily back home in Derbyshire as a Member of Parliament, I have seen both sides of the equation. As I say, nothing in life is perfect—no methodology is perfect, and no funding formulas are perfect. However, if there were an equivalent number of Members of Parliament here from urban areas—I know this because I used to be part of this conversation—they too would make a strong case that there are challenges, issues and problems in their areas that need attention. That is not to take anything away from my hon. Friend’s point about comparison, but it offers some context.
There are different pressures in urban and rural areas, in different geographical areas and in areas with different demographics. Ultimately, different choices are made. I have served in councils where there are significant choices around how social care is approached and where different choices are made around how leisure services and library services are approached. If we accept the principle of devolution—I know that my hon. Friend was not making this point per se—we also have to accept that there will be differences in the choices that are made, while recognising that some of those choices are down to the ability to determine things locally and some are more influenced by the overall process and decisions made elsewhere.