Final Settlement Debate

The parliamentary debate for the Final Local Government Finance Settlement took place on 12th February.

Realistically it was less of a ‘debate’ and more of a rebuttal by Government to any MP that raised queries or questions about the new formula for Local Government Finance. 

Secretary of State Steve Reed repeatedly stuck to the party line that funding is being realigned with deprivation as it should be, without responding to the various points made by rural MPs.

He also stated that, “We have used the most up-to-date data on deprivation to make sure funding accurately follows need.”  This was an interesting quote as it simply isn’t true, the formula may use IMD2025 to allocate funds, but the Recovery Grant, which has had an uplift of £440 Million, uses IMD2019 to allocate funds, so not actually the most up to date data on deprivation!

No evidence has been provided by Government that deprivation drives the cost of service delivery, in fact research carried out by MHCLG several years ago found that population was the greatest driver of cost of services, not deprivation.  The RSN has written to Alison McGovern, the Minister asking to see the evidence that deprivation drives the cost of services, we still await a response…

Graham Stuart MP raised the point several times about the unfairness of the high council tax in rural areas stating:

“A £200,000 house in the East Riding of Yorkshire will be paying between £3,000 and £4,000 in council tax, depending on its 1991 valuation. A £2 million flat in Westminster will be paying £2,000.”

The Secretary of State simply responded to this point by saying that “this settlement is about fairness.”

Other MPs raised the following points:

Gideon Amos MP (Taunton and Wellington)

“I am concerned that we are seeing reductions in Government funding for councils across the country, particularly in the case of rural authorities, which are especially hard hit by this settlement.”

“It is inexplicable that despite a consultation that considered maintaining the remoteness funding uplift across the country and across all funding heads of local government, it has been taken away from all funding heads apart from adult social care.”

James Wild MP (North West Norfolk)

“This is a serious cost pressure on rural authorities that the Government have chosen to ignore.”

“…the removal of the rural services delivery grant in 2025—the loss of funding that had been put in place specifically to acknowledge the high cost of rural service delivery.”

Sir Ashley Fox MP (Bridgwater)

“Does my hon. Friend acknowledge that the Labour Government have abolished the rural services delivery grant, a decision that has cost Somerset council £4.1 million and has cost other rural counties many millions of pounds—rural counties in which it is more expensive to provide services?”

Richard Foord MP (Honiton and Sidmouth)

“The final settlement for local government finance does not bring good news for Devon. Research by the Rural Services Network has shown that urban councils will have significantly more Government-funded spending power per head than rural councils.

By 2028-29, urban councils will have seen a 20% increase in Government-funded spending power, compared with an increase of just 2% for rural councils, yet on average, wages in the rural economy are lower than the national average wage. The settlement will place a significantly greater expectation on council tax payers in rural areas to cough up”

Helen Morgan MP (North Shropshire)

“How is Shropshire, which needs to receive exceptional financial support in this year, ever going to fill the ever-growing black hole unless the funding from Government reflects the costs of delivering services in rural areas?”

John Milne MP (Horsham)

“We know that geography is a major cost driver for councils. Rural councils face longer travel times for care workers, higher transport costs for schools, dispersed populations, thinner provider markets and recruitment challenges…”

“Why is remoteness not consistently recognised in children’s services, school transport and wider service delivery?”

Kerry Booth, Chief Executive of the Rural Services Network said: This settlement was a real missed opportunity for the government.  The formula needed reviewing and updating but the Government has focused solely on deprivation as the driver for costs, ignoring the reality of rural councils who face additional cost pressures to meet the needs of their residents. I am concerned about the long term impact on rural communities who face increasing council tax and diminishing services.

Read the full debate transcript here