Somerset Council: Funding and Governance

I beg to move,

That this House has considered the funding and governance of Somerset Council.

It is a pleasure to serve under your chairmanship, Mr Pritchard.

When I became a councillor—some years ago; probably 10 or more years ago now—one of the things that I took most seriously was my duty to those in our community who are more vulnerable than others, in particular looked-after children within the authority of Somerset, as it then was. I passionately believe, as do all of my Conservative colleagues here in Parliament, in trying to ensure that we have the best possible quality services for both our young people and all those in the rest of society who are vulnerable. That really goes to the quick with me and indeed with all of us. I am therefore passionate about trying to make sure that our local services have the funding that they need, and the inspiration that they need, to be able to do the best possible job in the best possible way. I want to make that a reality for those who depend on us for their care.

When I became a councillor, I also became aware that under previous Liberal Democrat administrations—there are various arguments about the genesis of the current situation, but the fact of the matter is that a large debt had been run up by the council to some of the public sector financing organisations and others, which needed to be serviced. The debt was of some £350 million or more. What we needed to spend on the interest on that debt was really detracting from what we needed to spend on for our constituents. The need to get that debt under control, to begin to repay it, was a big deal for the council in Somerset at that time.

Of course, at that time—under the coalition and after a massive debt had been run up nationally—there was a big need for councils across the country to make savings. The coalition made the decision—indeed, my predecessor as the Member for Yeovil, David Laws, was the Chief Secretary to the Treasury who decided, at that time, that he would champion the idea of being “the axeman in chief”, according to his autobiography, in trying to get spending by the Government generally under control. One of his decisions was to make savings in local authority budgets.

At that time, that was a necessity. What we also saw under the coalition, as things evolved, was that in order to try to protect some of the county spending budgets—the local authority budgets—money was provided to councils, so that they were able to restrict the increases in council tax that would otherwise have been required to pay for some services. The national Government made more money available, which meant we could limit council tax rises to 3%, 4% or 5% a year, rather than what otherwise might be required.

That is the context for the financing of Somerset Council and for the wider council environment. However, it also has to be said that part of managing the budgets for local authorities is that there needs to be creative thinking about how to get more growth, more investment and more housing into an area, with more council tax being delivered through that development, to be able to finance some council services.

In recent years, I have been quite disappointed that the new administration in Somerset, which is Liberal Democrat, has not taken some of those opportunities to think more holistically about how we might grow such economies to help pay for services. At the end of the day, it is only by getting the top line—the revenue—growing that we can get the tax revenue coming through to support the good-quality services that we all want to see for our residents.

For example, getting the town centre in Yeovil going again has been really important. As an MP, I got the Government to commit to very substantial town centre regeneration funding of £9.75 million through the towns fund to make that happen. The idea was to have a transformative change in Yeovil’s value proposition. It involved regeneration to enable the town centre and surrounding areas to be seen as places on the up, and to engender a virtuous circle that could increase property prices and get people excited about investing in their property, making sacrifices and a life for themselves and being able to make money from that. That kind of vision is essential for making places in the UK inspiring, where people think there is a future for them and an opportunity to make something of themselves for their families and their retirement.

Such things are really important, so it has been disappointing to see the local Lib Dem administration—thus far, at least—not capitalise on that investment. The projects have stalled. I have been working constructively with the local authority to make sure that the opportunities come forward properly in the time available, to transform those areas rather than just spending, or wasting, money on projects that do not quite work out or on public realm improvements that are not well thought through or well contracted. It is essential to focus on those basic issues of competence in the administration of how the funds are spent.

Another reason why Somerset is in a troublesome situation more generally is that the business case at the heart of the plan to move to a unitary authority, which was based on a very good decision by the previous Conservative administration to save money by amalgamating all the councils, has not been pursued by the new Liberal Democrat administration. Those savings have therefore not come through, some of the personnel and management rearrangements have not occurred, and many tens of millions of pounds that would otherwise have been saved have not been saved since the savings were to have started, a year or two ago. That means that the council is in a difficult position and needs more funding.

I am supportive, as my parliamentary colleagues in Somerset are, of the Government helping with more funding for social care and for thinking more carefully about how we manage some of the inflationary aspects that, in part, have put the council in the position that it is in. However, we cannot get away from the fact that the current Liberal Democrat administration has not taken the decisions and done things according to the business plan that was set out to save the money required to make the changes necessary to keep the council’s finances on an even keel.

My hon. Friend is absolutely right to highlight the challenges for local authority budgets, particularly for upper-tier local authorities, from rising social care costs, with the potential for productivity and other savings from a move to unitary. However, I am sure he will be aware that the Office for Local Government has published a report, with a dashboard to help councils identify how efficiently they are running their services and the general state of their finances. The conclusion of the Office for Local Government is that this was not just about money, but that where there have been failures in council finances—as, indeed, is the case in Somerset—it is down to a poor civil service and poor political leadership. It is incumbent on politicians and, indeed, council civil servants to take responsibility for that.

I agree with my hon. Friend. He is absolutely right that it is important that responsibility is taken and that some of these decisions—or lack of decisions, should I say—are held up for scrutiny. It is not acceptable for residents, because of the lack of money, to face the potential loss of services that are really important to them, such as the Yeovil recreation centre and the tourist information centres in Cartgate and Taunton. Such services are essential for our communities, and it is not right that those non-statutory services should now be threatened.

It is also right that we protect non-statutory services generally by making sure that the council does not go into special measures, or is subject to a section 114 notice, which is the council version of a bankruptcy. The Minister will know well how that works. These are potentially very threatening to things that are not core or statutory council operations, and we do not want to see bus services being cancelled because a council goes bust. Residents may not know or necessarily care who is in charge and what is happening, but this is a serious situation. The reality is that the current administration has caused this issue and has not taken the decisions necessary to avoid it. Nevertheless, none of us wants to see that happen and to see these services go, because they are really important.

My hon. Friend is making very powerful points. I have been trying to work out how long it is, but I have worked with Bill Revans, the leader of the council, for over 25 years, and I have a great deal of respect for him. My hon. Friend is quite right that none of us wants the council to go into special measures. The Minister has been very kind to all of us, and he has given us an enormous amount of time on this. I am also grateful to him for the money he has given so far—I thank him very much.

Would my hon. Friend agree that the big trick with this will be our working together, regardless of our personal views or our political views, to make sure that this does not happen? Once, many years ago, I had the commissioners in to West Somerset Council, and it was a complete disaster. We lost our cohesion, and that council disappeared soon after. This is not something we should take lightly, and I ask my hon. Friend to dwell a little bit more on how we can help the Minister and Somerset Council to get what they want, which is to maintain services—schooling, education and children’s services—so that we do not have a complete disaster on our hands.

I thank my hon. Friend, and he is absolutely right. We need to work together, including across the aisle. I am very fond of my Liberal Democrat ex-opponents on the council. I know them well, and in many cases they are very good people who want the best for their communities, as we all do. We need to work together, whatever we think about the decisions that should or should not have been made. I am willing to do that, as is my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger). I know that my other colleagues in the parliamentary party and the Ministers are willing to work on that, too.

I want to make it clear that this is not some story of Government underfunding; that is absolutely not the case. My hon. Friend is right to point out that the Government have listened and have given substantial new money, which Somerset Conservative MPs lobbied for. Their voices were heard loud and clear and we were given that money. None the less, we still face challenges and there are things that will be required, but we need to make sure that we keep these essential services that people rely on—the recycling centre in Crewkerne, the libraries and the various services that are not protected within statutory limits, which would be protected should there be a bankruptcy. My constituents rely on their bus services; they cannot see them cut. That would be a fundamentally difficult thing for them to deal with. We cannot allow that to happen. [Interruption.]

Order. There are Divisions in the House.

Yeovil is one of those places that is dripping with potential. It has an incredible defence manufacturing industry, people, skills and development organisations. In my opinion, as someone who has been around the world looking at development and business opportunities for many years, I have never seen an environment that is so conducive to partnership working between business and local institutions to make things happen as there is at Yeovil College. Yeovil and the wider area need that vision from the council to back that up, to be the glue to make permissions happen more easily or to put in infrastructure, whatever is needed.

We need that vision from our local council, and that is what we are not getting right now. It is incredibly frustrating, for someone who wants to do the best to make that difference, with opportunities for people in our town, to find that at all stages it has been underwhelming, shall we say, for everybody dealing with the local council. I urge Ministers to think structurally about change, so that local councils have more accountable responsibility for bringing those things forward.

It is extraordinary, when looking around the world, to see how welcoming some other places are to investment, new thinking and different ways of doing things. When I proposed the idea about six or seven years ago of a new town development on the A303, to capitalise on the advantages of investing so much money in the A303 dualling, which we in Somerset fought so hard to get from the Government, we were met with a brick wall when talking to the council about executing those opportunities, and thinking about whether such things should be in the local plan, to excite local entrepreneurs. It has been such a frustrating process. We need to make sure we have well-equipped, local economic development operations of one kind or another, and to make sure we have good access to local and national incentives that attracts business to set up in different places.

My hon. Friend is making a very powerful point. I think what he is getting around to is levelling up. Somerset has not done very well out of levelling up, and my hon. Friend and I have talked about this. I would say to the Minister that levelling up would help immeasurably. What we need to look at is the learning of skills, rural deprivation, helping young people get on to the job ladder in rural areas—that covers the whole of Somerset—and we certainly need to look at the way people are leaving school. Although we have Bridgwater, Taunton and Yeovil, there is not much in between, and therefore young people have not got those opportunities. I therefore make a plea through my hon. Friend to the Minister that we start talking about getting a levelling up bid for Somerset, where we could work with the council to get money to help the most vulnerable.

My hon. Friend makes a brilliant point. This is all about thinking of a plan for how we join up those urban and rural development opportunities and our skills development opportunities to make the most of what is an incredible area.

Somerset is a rural area, but I have never seen anything like it in my travels of the whole world—there is so much energy and sophistication in what is a rural environment. Yeovilton is in the north of my constituency —it is the home of the Fleet Air Arm, and the site of one of its core operations. We have the manufacturing cluster around Yeovil, and indeed we have north Dorset, which is second to none in the world in its defence manufacturing abilities. We need to support that—it means people come from all over the world to work and raise their families there; it is not an average rural area by any stretch of the imagination. We need to build on that; it is a massive opportunity for the country in exports, high-value engineering jobs, and all the things that we as a nation are supposed to be trying to encourage.

We need to support our local authorities and ensure they are doing the right thing. We need to ensure they are making the right decisions, at the right time, to be able to save money where it is required, and that they are also thinking about ways of making money where it is required. That should not just be through some fly-by-night plan to invest in commercial real estate; local authorities have no ability to judge if such plans are a good idea, and that is something we need be careful they do not do. However, those core activities of working with private industry to make sure the incentives and skills are there for business is the way forward—that is the way to finance any local authority.

There can be endless arguments about who gave what money to who and so on, but unless that core business of getting growth going in an area is there, with proper support and incentives from local and national government, it will be very hard to compete with some other parts of the world that are doing a brilliant job of it. They are rolling out the red carpet to welcome people to those areas, and they are giving massive incentives: 40% or 50% capital incentives are being paid up front to people who want to start businesses and invest in renewable energy generation—or whatever it is.

There are very serious things going on out there, and we need to think about how we match that. This idea that we can just put our fingers in our ears and pretend it is not happening is for the birds. These are real-time decisions being made now that people are having to think about, and we need to make sure that we are on the same page and we are competitive. Somerset is an amazing place with amazing opportunities, and we need to focus on how we can capitalise on those. They could be an absolute driver of economic performance, and the realisation of the aspirations of people in all income brackets across our country. I hope the House will urgently consider this topic.

It is an honour to serve under your chairship, Sir Mark. I thank the hon. Member for Yeovil (Mr Fysh) for securing this really important debate. I agree with him on many of his observations about our wonderful county that is Somerset and, indeed, the opportunities that it offers.

Local authorities exist to provide crucial frontline services to their residents. Some 63% of Somerset Council’s budget is spent on children and adults who need council care, but the stark reality is that the funding model is broken. As a proudly active Somerset councillor, I have seen the situation at first hand. The Government have decimated council finances and local communities are paying the price. This is a national problem that requires a national solution; it is not specific to Somerset.

Somerset Council has declared a financial emergency. It did so late last year because of the significant pressures on its finances due to sky-high inflation, spiralling costs of providing services, especially in social care, and a broken system for the funding of local government.

The council has been completely transparent about the measures that it has taken to address the £100 million funding gap for next year and will do what is necessary to continue to provide those essential services to its residents. I know that most of Somerset’s MPs have met Councillor Bill Revans and the Somerset Council team to learn more about the financial emergency, but sadly the hon. Member for Yeovil has not yet been able to find time to do so. However, speaking to the council’s leader this morning, I found that the offer of a meeting still stands, and I would be happy to join him if he wishes to meet Councillor Revans.

The hon. Member will be aware that some of the issues facing the current administration are the legacy of the previous Conservative council. Vesting day for Somerset Council, the new unitary council, was on 1 April 2023. The previous administration’s One Somerset business case stated now that the seemingly meagre £18.4 million-worth of savings would be realised after three years, not within nine months of forming a new council. The previous administration was guilty of irresponsible fiscal decisions. Six years of council tax freezes from 2010 reduced income from council tax, a move that saw a minimum shortfall of £24 million per year and delivered a total cut to services of £150 million.