It is good to see you in the Chair again, Mr Deputy Speaker. Islanders sometimes ask me what the purpose of these debates is, and the answer is simple: they are occasions for me, as the Member of Parliament for the Isle of Wight, to raise issues of importance for the Island and to do so on the public record—in Hansard—and then to get a considered response from a Minister of the Crown, who in this case is my hon. Friend the Member for North Dorset (Simon Hoare), and I welcome him to his new role. His predecessor, my hon. Friend the Member for North East Derbyshire (Lee Rowley), was good enough to visit the Island and engage in this issue consistently. I know that the Minister has some big decisions to make in a short amount of time, so I will help him make those decisions as much as I can by trying to make as strong a case as I can.
The critical point that I will argue is that the Isle of Wight is the largest island by population in England—an island being separated by sea from the mainland—and the only island authority in the UK that does not receive a permanent uplift to council funding to reflect the additional costs resulting from separation by sea from the mainland. I will make two arguments. The first is on why the Isle of Wight is treated differently from every other island with a sizeable population separated by sea from the mainland. Secondly, I will look at what that uplift in financial terms would be.
A couple of hours ago, I received a letter from the Minister in which he said:
“Island funding is an issue you have raised with the Department numerous times, and I am pleased we have progressed this issue to this stage.”
He is certainly right that I have raised it numerous times. I have raised it on dozens of occasions, with the most significant of those—debates in the House and letters to Prime Ministers—being: 9 May 2018; 25 September 2019; twice in October 2019; twice in October 2020; 15 June 2021; 10 August 2021; 30 November 2021; 28 November 2022; and 26 September 2023. As I said, there were multiple occasions in between.
We do not get an island factor and, as I said, we are the only island that does not. We were recognised to have that analysed in the fair funding formula, and it was the Prime Minister, when he was in my hon. Friend’s role as local government Minister, who committed in the fair funding review to look at the cost of providing services on an island and on the Isle of Wight. Sadly, thanks to covid, that fair funding review was never implemented. I consider that to be an historic injustice. We have in effect gone back to the era of modern government that started in the 1960s.
There is a generalised rule for islands that is not being applied to my constituency of the Isle of Wight. There is no logic or consistency to that position, and I suspect it is one that would be difficult to defend, either morally here or legally in a court of law, because one of the principles of modern governance is consistency and fairness, neither of which seem to apply in this case.
I turn to a series of studies. Since 1989 there have been six major studies into the impact of separation by sea on the funding of public services on the Isle of Wight. The most recent was published by the University of Portsmouth, to which I am grateful for its work—it shows the value of working with academic institutions and doing really good quality, peer-reviewed work. Portsmouth argued that the additional costs of providing government services on the island were up to 25% of net expenditure. It identified three factors that inflated our costs and made it difficult to provide Government services for the same amount of money.
The problem for my hon. Friend the Minister is the methodology. If the inputs are incorrect, the outputs will not be correct either, and if nobody is taking into account the additional costs of providing government services because the methodology does not allow that, we will not get outputs that are fair and consistent either with other authorities of the same size or with islands.
Portsmouth identified three factors: first, the lack of a spillover of public goods between the mainland and the Isle of Wight, which forces us to be self-sufficient, but at a cost; secondly, the Island premium of higher prices charged by suppliers on the Island because there is a smaller market, combined with the ferry costs— I will come to that—and thirdly, the additional costs to the Island that result from physical and perceived dislocation. Personally, I do not understand why anyone would not want to live on the Isle of Wight—considering that there are 8 billion people on the planet, it is probably quite good that most choose not to—but it is sometimes quite difficult for us to find experts, such as senior NHS doctors. Those are the three factors.
I want to make it clear that since I became the Member of Parliament in 2017, working with other people, the NHS and the council, we have got and delivered a better deal for the Island. We have got major investment in the NHS, the railway has undergone significant repair, Isle of Wight College is about to be demolished and rebuilt, and both our levelling-up bids have been accepted. We have also saved shipbuilding in East Cowes and got £20 million from the towns fund for Ryde. We have £175 million in total, which is buying good things like a better health service, better jobs and better life chances for our constituents. I am proud of that record, but that £175 million is a capital sum. The issue is the annual funding settlement to the council. It is an element of getting a better deal. We have a better deal in many areas, but I want a better funding settlement for my council.
Related to all that, the elephant in the room is the ferry crossing, which has one of the highest costs in the world. I will not dwell too long on this, because I want to hear the Minister’s eloquent response, but we have some of the most expensive ferries on earth. We have had lots of good ideas about what to do about them, but we have never had a shared manifesto that the MP and the council can agree on. The Island’s council has no powers over the ferries, despite being the transport authority, and as far as I can see it has never taken a policy position. We have the Transport Infrastructure Board, under the great leadership of Christopher Garnett, but the ferry firms’ participation is voluntary, and I think that is wrong.
I understand that soon the ferries will start to have discussions about grants and Government support to move to net zero. At that point, when public money is being spent, there should be a quid pro quo, such as a public service obligation of some kind. I am also moving towards the idea of a Solent ferry regulator, which would have the legal power to sign off on timetables, debt levels, changes to ownership and other issues related to the ferries. The council should also have a seat on both the Wightlink and Red Funnel boards.
I will leave the ferries element there because I will develop it in the new year, but it is part of the additional costs that the Island faces, adding cost to everything physical that we try to get over, and to people coming over as well. In fact, I think the fair funding formula said that a foot passenger adds about 35 miles, and a vehicle bringing stuff on to the Isle of Wight adds the equivalent of a drive from London to Peterborough—about 70 miles.
Going back to the reports on the Isle of Wight, the most recent one, commissioned last year by one of the Minister’s predecessors, was won by a company called LG Futures, which is a local government think-tank that does good work developing ideas for local government. The Government commissioned the report to review the evidence and work out the additional cost of providing public services on the Island. LG Futures peer-reviewed the evidence and concluded that every relevant study undertaken independently—that is the key word—confirmed the additional costs of providing parity of public services on the Island. The critical point is that the Island cannot simply access the services provided by neighbouring authorities, because we are separated by sea. We have the dislocation and the island factor—eloquently outlined in the University of Portsmouth’s report, and indeed reports going all the way back to the Edwards commission in the 1960s. Therefore, the Island provides fewer services compared with comparative councils, neighbours and unitary authorities. That is why we believe that the current system is unfair.
I will speak for another eight minutes or so, because I want to make sure that the Minister can get a word in edgeways. I persuaded the Government to reopen the examination of Island funding earlier this year, and I thank the Minister’s predecessor for doing so. We have engaged closely with his Department. The work we have done this year is probably the most detailed to date. Throughout the process, the Isle of Wight gathered all the data that we have been able to, and we made estimations where we were not able to get statistical data. One of the issues we have found is that perfect data is not readily available, therefore a level of ministerial judgment is needed. In our evidence, we believe that the total net expenditure and unit costs on the Island are about 14% above the statistical average of our neighbours. When Portsmouth says up to 25% and zero is no change, the estimates we have come up with this summer, working with the Minister’s Department, show an additional cost of 14%.
There has been a series of letters, and I know the Minister wants to have another look at the evidence. He is perhaps writing to us again. I am very grateful for that, because it is another chance for us to make our case. Once we provide that evidence again, I would like to speak to the Minister again, if he has time, just to make sure that he understands the arguments we are presenting. His own Department now says that
“there may be additional costs associated with Island status.”
I am grateful for that acceptance of our case. It is somewhat hedged because we are dealing with public servants and there is a degree of ministerial judgment here, but I disagree with the equivocation. There are clearly associated costs. For me, it is a question of how much. Unless the Minister seriously wants to argue today that we can provide the same level of public services for the same money on an island with a smaller market and hyper-expensive ferries as we can on the mainland, then with great respect to him—I am sure he will not be making that argument—that would simply not be a credible argument.
That brings me back to the core point and the issue of the principle here: why is the Isle of Wight treated differently from other islands that are effectively the same, separated by sea? Once we accept the principle, what is the monetary value put on it? For England’s only other island authority, the Isles of Scilly, the uplift or island factor is 50%. It is different from the Isle of Wight. It is smaller and there is an increased difficulty in providing services—I get that—but that is a 50% uplift. If we look at perhaps more comparative islands, the special islands needs allowance in Scotland provides a 10% uplift in general funding for Orkney, Shetland and the Outer Hebrides. For councils with significant populations, the allowance is allocated between 5%, 20% and 50%. In all cases, a simple fact is recognised: there is an island uplift because it costs more to provide Government services on an island.
I come back to my central point. I sent the Minister my speech early. I have edited and tweaked it a little bit, but he has had a copy of it for a day or so. I would like very much to ask him for the Government to accept in principle that the Isle of Wight should have an island uplift, as all other islands separated by sea from the mainland do, and then to work with me and the council’s experts to find a number. For me, the most important element is the acceptance that the Isle of Wight should be treated equally—I think that is legally and morally justified—as an island as others are. We negotiated last year what the Government described as a temporary uplift. It was about £1 million. I would like to see that uplift at the heart of an island settlement that is then, frankly, increased. I am very grateful for the £1 million, but it is not a great deal of money.
To sum up, I am very grateful to the Minister for listening so closely and I really appreciate the work he is doing on this issue. It is a complex area and he is trying to balance lots of things. I would say that a significant uplift for the Isle of Wight is effectively an accounting error for most large councils. Relatively modest sums would make a great deal of difference. For example, they would enable us to keep our regeneration team. We need that team. We had two levelling-up bids accepted, which shows we need the money, and that we had the professionalism to put good cases and go out and get it. If we have no non-discretionary spending at all, it makes it very difficult for us to build a future that we want for our islanders.
The Isle of Wight is an exception to the current rule. I think that is wrong and that we are seeing an historic injustice. The study suggests that our island status, the fact of being the Isle of Wight, makes it between 4% and 25% more expensive—between £10 million and £60 million—to provide similar sets of services. I urge the Government and the Minister to continue to talk with me and, on the first point, to recognise that the island should be treated the same as other islands separated by sea, and secondly, to work to provide a realistic figure that will make a difference to my constituents and my council.