Rural Upper-tier Local Authorities

Wednesday 2nd September 2026 Westminster Hall

[Paula Barker in the Chair]

14:30

[Helen Morgan (North Shropshire) (LD) [R]]

I beg to move,

That this House has considered Government support for rural upper tier local authorities.

I am a vice-president of the Local Government Association, and I am extremely worried about the widening gap in opportunity, social mobility and economic growth between rural and urban areas. Rural areas are being held back and the futures of rural children are being limited by public services that are underfunded and overstretched, lamentably slow digital connectivity, the lack of public transport, and urban-centric perceptions based on misunderstandings about the nature of rural life.

The last local government finance settlement laid bare that neglect in financial terms. It was a stark admission from this Government that their plan is to strip funding from rural areas to improve services in urban ones. The Rural Services Network has calculated that urban councils will receive 32% more funding per head than rural councils next year. Meanwhile, rural residents pay on average 17% more council tax per head than urban residents, out of lower than average wages, to plug the gap, yet the cost of delivery means that they receive a poorer public service.

For Shropshire council, the funding situation is particularly grave, following 16 years of catastrophic management by Shropshire’s Conservatives. When the Lib Dem administration took over in May 2025, Shropshire was in the most difficult financial position of any council in England. The recent Chartered Institute of Public Finance and Accountancy report on the huge challenge in Shropshire reveals the details of the Conservatives’ poor management: unrealistic budgets and constant overspends that burned through all the remaining reserves; an obsession with unaffordable vanity projects, such as the purchase of Shrewsbury’s shopping centres and millions spent on an unaffordable road; a sloppy workforce restructure in 2024-25, which drove out the talented managers needed to transform the financial situation; and the “legacy impact” of five years of consecutive council tax freezes. All that was left as a parting gift for the new administration to pick up. The report describes the direction of the council under its recently appointed new chief executive and four-to-five-year improvement plan as a “positive step”, and a peer review by the LGA praised the “significant strides” made so far, but the financial position remains perilous and the challenge to restructure the council is huge.

Eighty per cent of Shropshire council’s budget is spent on social care, an issue on which the Liberal Democrats have long called for urgent action. The cost of delivering social care in a rural area with the demographics of North Shropshire, where 25% of the population is aged over 65, means that the pressure is only set to rise. Adult social care spending has already been rising by about 5.8% a year, more than could have been generated by council tax increases, because people are living longer, needs are becoming more complex, and workforce costs are rising, with care providers consequently charging more.

Demand for education, health and care plans has risen even faster. Shropshire now has 3,016 active EHCPs, a 21% increase in one year compared with national growth of 11%. The number of school-aged children with EHCPs has increased by 78% since before the pandemic. That puts more pressure on specialist education, school transport and family support. Last year, the council put up council tax by 8.99%. Although that brought in a massive £21 million a year, it covered only about a third of the extra cost from demand and inflation alone.

Amid that financial turmoil, the Government have cut funding per head in Shropshire. It is projected to fall well below 90% of 2024 funding by 2028, while the national average is set to rise to around 118%. The exceptional financial support provided to balance the books bears interest and must be paid back; it worsens prospects for the future, and for a considerable time. Under the Government’s new devolution plans, there is a risk that the gap between mayoral and non-mayoral authorities could increase further.

During the Prime Minister’s statement yesterday, I asked him about the importance of power and resourcing being made available to all authorities, not just those that have formed a combined authority or have a mayor. His answer was in some ways encouraging, but in other ways it bothered me. He said that when Shropshire council could

“stand on its own two feet”—[Official Report, 1 September 2026; Vol. 790, c. 49.]

it would be able to access devolution, but the Government’s own three-year financial settlement is forcing austerity on rural areas, making the achievement of self-sufficiency far less likely.

[Noah Law (St Austell and Newquay) (Lab)]

I am sure that the issues in Shropshire that the hon. Lady mentions are the same as those that we in Cornwall have experienced. Does she agree that the move to a mayoral share of income tax is not a detriment to non-mayoral areas like ours but an opportunity to reset the model? We have seen integrated settlements and money being thrown at mayoral regions, but this is an opportunity to turn the taps off for those regions and turn them back on for areas like ours that have not proceeded with a mayor.

[Helen Morgan]

The hon. Gentleman makes a good point. I would need to see the detail of that proposal and what it would mean. Shropshire is already a unitary authority and is essentially at the bottom of the list for a devolution plan, so that seems too far off. There seems to be no prospect of stabilising the financial situation until there is a firm plan to ensure that the powers needed to turn the area around, and the resources to go with them, are firmly in place. We urgently need clarity on that.

The hardship and austerity in rural areas has come about largely as a result of the removal of remoteness as a factor when calculating what it costs for a rural authority to deliver services across a vast area. The County Councils Network estimates that that has removed £300 million from its members’ budgets—an amount that the Government expect to be made up by increased council tax.

Shropshire council has been squeezed at both ends—first by years of Conservative maladministration, and then by Labour cutting its funding, despite the obvious need —and it is far from alone. Rather than tackling the problem head on, the Government have underfunded rural councils, which has perpetuated rural deprivation. That is particularly acute where people lack access to services, and it is hidden, unlike urban deprivation.

While door-knocking in my constituency, I met a delightful elderly gentleman living in a small cottage, and I was astonished to also meet his grandson, who was apparently living in his shed in the garden because he was unable to find anywhere else to live. Such cases go unnoticed in homelessness statistics, because families and communities find their own solutions to wrap around those individuals, but no one thinks a shed is appropriate accommodation for that young man. He should not have been allowed to fall through the net.

A lack of funds for local transport perpetuates isolation and leads to a vicious cycle, stunting economic growth and creating further challenges for the council’s provision of services such as social care. When members of the Casey commission came to Shropshire to talk about the challenges of delivering social care in a rural area, they were astonished by the notion that carers must have a car because there is no transport in the evening or on a Sunday.

Yesterday, the Prime Minister spoke of the importance of local transport and publicly provided services. We all agree with him, but Shropshire’s bus allocation has been cut despite the fact that it has lost more bus miles than anywhere else. Revenue funding is due to drop £175,000 in 2027-28. The Secretary of State for Transport, in an answer to me about step-free access at Whitchurch station, implied that the funds will be spent where the people are, not where the need is. She said:

“When we are investing in the accessibility of stations in the future, we need to get maximum benefit for the travelling public.”—[Official Report, 16 July 2026; Vol. 789, c. 1059.]

Previously, that has meant that the funds go to the most densely populated areas, not to those where there are no real alternative forms of transport.

The patchy public transport network across North Shropshire means that it is almost impossible for most residents to manage without a car, and that brings further associated costs. Those who cannot access a car, whether they are young or old, become isolated and unable to access opportunities, education and services.

Similar patterns of deprivation are reinforced through Government funding for education in rural areas, even though they often already struggle with teacher recruitment and retention. Schools in North Shropshire received an average of £6,460 a head last year, compared with a national average of about £7,910, but outcomes at GCSE and key stage 4 are consistently lower than the national average, and indeed the west midlands average. How can the Government justify lower funding when the outcomes are already lower? Surely every child deserves the opportunities provided by a properly funded education.

That applies to capital spending in education too. One shocking example in my constituency is a primary school in one of the most rural parishes that still has outside toilets, in their original Victorian red-brick building. A lady told me during my summer tour this year that her granddaughter was too afraid to use the toilets because they are full of spiders and had an accident at school as a result. That is unacceptable. That is the kind of thing that people remember when they are 50 if it happened to them when they were seven at school.

Young people in rural areas are having their horizons limited as a direct result of Government policy. That needs to change, urgently. In what way are the Government tackling inequality if rural and coastal areas are persistently underfunded, despite their worse outcomes? My constituents rightly perceive an entirely broken system in which every year they pay more and receive less. That is obviously unfair and is opening the door wide to populists and extremists who exploit the situation with divisive messages to divide our community and simple but unworkable solutions.

The new Prime Minister has given us all hope by promising growth in every postcode. He will fail in rural areas if he does not address the obvious unfairness that Government policy combined with the pressures of ever-increasing demand for social care are delivering. Proper devolution will help rural councils tailor public services to the areas that they serve, but there must be acknowledgement of the need for a fair allocation of resources to go with those theoretical powers. I hope the Minister can provide details in his response.

14:41

[Terry Jermy (South West Norfolk) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Barker. I thank the hon. Member for North Shropshire (Helen Morgan) for securing this important debate. Like her, I am passionate about local government. I find myself in Cornwall corner here today, but I am proud to be a Member from Norfolk. I stood for Norfolk county council way back in 2009 and lost in a bad year for my party. I stood again in 2013 and lost by a single vote, though I was delighted to be elected in a by-election six weeks later. I served on the county council for 13 years and only resigned when I was elected as an MP. It gave me a real understanding of the complexity and difficulty involved in delivering services across a wide geographical area such as Norfolk.

The London borough of Islington is the smallest upper-tier authority in the country, with statistics not dissimilar to other urban upper-tier councils. It has a population of about 223,000 people, covers less than 6 square miles and has a population density of 15,000 people per square kilometre. By contrast, Norfolk, where my constituency is located, is home to 940,000 people—nearly four times as many—but covers more than 2,000 square miles and has a population density of 175 people per square kilometre.

On top of that, the median age in Islington is 33, while in Norfolk it is 10 years higher. That is because—I am slightly in danger here—Norfolk is of course the most beautiful county in the country and many people rightly choose to retire there. However, that puts an additional strain on public services, and it means that the proportion of the population who are of working age and contributing tax is lower. When that is combined with years of underfunding by the previous Conservative Government, as the hon. Member for North Shropshire mentioned, rural residents inevitably pay more for services out of lower than average wages. As is the case for several rural upper-tier authorities, Norfolk faces higher costs to provide services across its dispersed population.

This disparity causes many challenges and weakens our potential for economic growth, and that is the key point I want to get across to the Minister. Rural upper-tier authorities often do not have the funds available to invest in the services that would drive economic growth. There is limited investment available, for example, for rural infrastructure, transport, housing, skills and broadband.

If the Government want to see rural communities contribute more to national economic growth in every postcode, as I believe they do, they need to recognise that funding local councils would be a good place to start. I therefore ask the Minister to consider three particular measures. First, future local government settlements need to include much stronger and more transparent rural sparsity components, taking account of not just population but road mileage, travel times, population age and the number of communities a council has to serve.

[Richard Foord (Honiton and Sidmouth) (LD)]

The hon. Gentleman is making an excellent speech, and he is absolutely right about road mileage. Devon has to maintain over 8,000 miles of road, which is the most of any upper-tier authority in the country. Does the hon. Gentleman agree that partitioning Exeter off from the rest of Devon—from the rural Devon hinterland—will strip away the tax base from Devon county council, meaning it will be unable to provide alternative services that would otherwise power growth?

[Terry Jermy]

I understand the Devon road network, which is similar to Norfolk’s—Norfolk and Devon’s councils were paired—and there are obvious challenges with it. I am sure the Minister heard the hon. Gentleman’s point about local government reorganisation, but I will not comment on it. I can barely understand Norfolk’s proposals, let alone Devon’s.

As I was saying, road mileage, travel times, population age and the number of communities that a council serves are all crucial. There are 72 villages and three market towns in my constituency; they are all different, with unique challenges but also unique opportunities.

Secondly, the Government need to do more around the special educational needs and disabilities crisis. I appreciate that SEND is somewhat outside the Minister’s brief, but it is a crucial issue for councils like Norfolk’s that are trying to meet the growing cost of SEND while delivering other services.

Thirdly—this is more Norfolk-specific—there needs to be sufficient funding for the reorganisation of Norfolk’s local government structures. The objective should be to ensure that the money spent on creating new authorities does not come at the expense of the services that existing authorities currently provide. I am a huge supporter of devolution and local government reorganisation in Norfolk, but it is expensive and time-consuming and, frankly, councils already have enough to worry about at the moment.

14:46

[Olly Glover (Didcot and Wantage) (LD)]

It is a pleasure to serve under your chairship again, Mrs Barker, after a bit of a break since the last time.

I thank my hon. Friend the Member for North Shropshire (Helen Morgan) for setting out so well the funding challenges facing upper-tier councils. She quite correctly articulated the challenges in relation to special educational needs provision, to which I could add home-to-school transport and, in the case of Oxfordshire, a population that is not just ageing but growing. Social care accounted for 52% of Oxfordshire county council’s budget in 2024-25.

I want to focus my remarks on perhaps the most visible public service that councils provide, which is highways. For the current financial year, Oxfordshire’s Government allocation for highway maintenance is £33.5 million. This funding must maintain all highway assets in Oxfordshire, including 3,009 miles of carriageway, nearly 2,000 miles of footways and cycleways, 3,500 bridges and public right-of-way structures, 168,000 drainage assets and 124,000 electrical assets, such as street lighting, traffic signals and safety infrastructure.

Oxfordshire county council was graded “Green” in the spend category of the Department for Transport’s recent exercise in respect of the Government’s local road maintenance ratings. That means the council invests “significantly” in maintaining its roads and goes beyond what the Government funds. Independent modelling shows that in Oxfordshire around £50 million per year is needed simply to maintain the network in its current condition, which means the Government funding falls short by around £16 million per year. Ideally, the county council would want to go even further and improve the condition of the roads rather than just maintaining them in a steady state; the amount of funds needed would then be even higher, at £60 million per year.

Oxfordshire consistently spends significantly more than it receives from the Government for highway maintenance, but it is still a long way off the amount required. The council estimates that there is a maintenance funding backlog of over £700 million across the county’s highway network, part of which is to do with the previous Conservative administration and its stated policy of managed decline. The situation will only worsen with prolonged underfunding from central Government.

This is a national issue. There are Members present from throughout the country, as we see whenever we discuss the subject of road surfaces. Without sustained funding, local authorities remain locked into a reactive cycle, whereby potholes re-emerge faster than they can be eliminated. Despite such challenges, Oxfordshire county council is trying to do things differently and get on to a proactive and preventive footing in relation to highways maintenance. It has significantly improved its programme of gully clearance and delivered the largest programme of surface dressing in at least 20 years, investing £14.5 million and treating around 2 million square metres of carriageway to prevent potholes from forming in the first place.

In the past year alone, the council repaired more than 57,000 defects, including 37,000 potholes. It is spending £8 million this calendar year on a new surface dressing programme to tackle long-term road maintenance issues and prevent the formation of potholes. Between April and June, 87 roads across the county were treated, covering more than 1 million square metres of carriageway across 62 towns and villages in Oxfordshire.

Amid these challenges, the changes to Government funding formulae will mean a cut to Oxfordshire county council’s budget of £24.1 million over three years, further undermining its ability to do more preventive work. If the Government continue to make unwise decisions, the council is, like so many others, at risk of seeing a vicious spiral of cuts and deterioration to highways and wider services.

It is important that we do not pit different parts of the country with different geographies and demographics against one another. Every part of the country has a need in one form or another. Of course, our new Prime Minister has said so himself with the idea of

“good growth in every postcode.”—[Official Report, 1 September 2026; Vol. 790, c. 27.]

The Government have certainly talked about that a lot in respect of Oxfordshire, with the Oxford-to-Cambridge growth corridor being so pivotal to scientific research and to accommodating housing targets.

A new funding formula is needed that clearly cannot be based on the number of people alone. There are different challenges in urban and rural areas and, indeed, in those that fall between the two, as much of my constituency does. There remains a question of how we can work together to properly design, build and proactively maintain our roads and highways. Individual councils acting alone cannot hope to solve that problem by doing their own thing in isolation.

Oxfordshire county council will soon cease to exist, thanks to the local government reorganisation. The question remains: what of the future? I conclude by emphasising that the Oxford-to-Cambridge growth corridor aspirations will certainly not be achieved if our councils are starved of funding and our highways further deteriorate.

14:51

[Perran Moon (Camborne and Redruth) (Lab)]

Meur ras —it is an honour to serve under your chairship, Mrs Barker. I congratulate the hon. Member for North Shropshire (Helen Morgan) on securing this important debate.

I want to focus on SEND and home-to-school transport. On SEND, Cornwall is the 11th lowest funded of 151 local authorities, receiving less than half the per pupil funding of Kensington and Chelsea. Over the last eight years, the number of our pupils with an EHCP has almost doubled, but the delays in issuing EHCPs are far longer than average. In Cornwall, two thirds of those waiting for an EHCP wait for more than 20 weeks, compared with about 50% in England, meaning more stress and uncertainty for Cornish children and their parents.

In a very large, long and remote coastal region, the additional costs of transport show up persistently in every aspect of Cornish life. Cornwall council’s expenditure on home-to-school transport has increased by nearly 300% over the past seven years—a far steeper rise than for our urban counterparts. When it comes to funding more broadly, being a coastal community with some of the UK’s finest beaches is actually a double-edged sword; in fact, it could be argued that we are damned by our natural beauty. Significant in-migration by wealthy English retirees not only places additional pressures on healthcare and our housing market but masks the true extent of deprivation in Treasury funding models.

In my constituency, the average weekly wages in Camborne, Redruth and Hayle are nearly £100 less than the national average, and child poverty is currently at 35%. We were very thankful that the costs of being remote and coastal were recognised in the local government funding settlement for adult social care, but the cost pressures for home-to-school transport were not reflected. I respectfully say to the Minister that a principle cannot be half applied.

[Helen Morgan]

The hon. Gentleman is making an important and fundamental point: everything costs more when it is spread out. For example, bin collections cost a huge amount more for unitary authorities. Home-to-school transport is not just for children with SEND but for children who cannot catch the bus to school because there is no bus. Everything costs a vastly significant amount more than when people just live down the road. Does the hon. Gentleman agree that it is really important that that is reflected in Government funding formulae, because it is crippling our councils?

[Perran Moon]

I do agree with the hon. Lady. I cannot believe that in the 21st century it is beyond the wit of man or woman to calculate the major costs that affect our rural and remote coastal areas compared with the costs for our urban counterparts. We are not trying to deprive the services available in urban areas; it is about raising the level of services for remote coastal and rural communities to the same standard.

That brings me back to my central point. Despite the rising costs and demands, Cornwall is being asked to do far more with far less, which is why we need a comprehensive, non-mayoral, Cornwall-only devolution deal that allows us to overcome some of the challenges of life in the Duchy.

14:56

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Mrs Barker. I thank the hon. Member for North Shropshire (Helen Morgan) for setting the scene incredibly well. It is good to see another supreme example of her fighting for her constituents, as she always does.

As the Member of Parliament for Strangford, a largely rural constituency, I am acutely aware of the challenges that face those in our rural communities. I know the Minister is not responsible for that, but I am here to support the hon. Lady as she puts forward the case on behalf of her constituents, and I look forward to the Minister’s response. It is nice to see him back in his position again—he was a Minister before and then an active Back Bencher, and he is back again as a Minister. Well done to him for all his efforts.

There are growing concerns about the level of support being provided to upper-tier rural authorities in England. England’s largest councils are expected to receive just 2p in Government funding for every £1 of their rising costs over the next three years. This comes as funding is increasingly being directed towards urban areas, leaving local rural authorities facing an estimated £11 billion funding gap. The consequences could be significant, with rural councils in particular likely to have to reduce and make cuts to everyday services such as libraries and community social care. Other hon. Members have spoken about those issues, as will others after me.

Analysis by the County Councils Network shows that county and large rural councils will face an additional £7 billion a year in service costs by 2029. This follows its warning at the beginning of last year that Government cuts are being severely felt in rural areas, with around four in five rural local authorities stating that they felt they were in a worse position following the autumn Budget and the local government finance settlement. The network has called for a reinstatement of “remoteness” in the local government funding formula. There is perhaps a case to be made—as the hon. Member for North Shropshire did exceptionally well—that remoteness must be a priority and part of the scoring card when it comes to funding, to properly recognise that the delivery of services across sparsely populated areas costs considerably more, and the impact on rural communities.

As always, I give a Northern Ireland perspective, not because the Minister has any answering to do for it, because he does not, but to give examples of where some of what the hon. Lady and others have said relates to the situation back home in Northern Ireland. While Northern Ireland does not have a two-tier local government system—our 11 councils are single-tier authorities—our rural councils face many of the same challenges. One is that our councils play a much wider role than simply delivering standard local services. That is why it is of great concern that local community initiatives in rural areas are increasingly vulnerable to having their funding withdrawn.

Some of the things that affect us in Northern Ireland also affect the hon. Lady’s constituency here on the mainland. In March, concerns were raised about the potential closure of a youth forum in the Londonderry area due to funding difficulties. The forum highlighted that rural isolation and social exclusion are precisely the types of issues that these services are trying to address—the very things that the hon. Lady and others have specifically requested.

I was elected as MP for my constituency of Strangford in 2010, and in 2015 the Ards and North Down rural partnership was established to act as the administrative and financial lead for the Northern Ireland rural development programme, an excellent programme that did great work in my constituency and indeed across the whole of Northern Ireland. The programme was completed in 2022, but that work must not be allowed to stop there. We must build on that success with sustained investment.

The Ards and North Down rural partnership is still working and doing good things, and the Government back home have recognised that rural isolation and rural needs are specific. The Ards and North Down rural partnership demonstrates the difference that targeted investment can make in our rural communities, from improving the local play parks, green spaces and the harbour areas, to supporting community centres.

Does the Minister agree that equality does not always mean treating every area the same, and that rural areas should receive funding that recognises the additional cost of delivering services across the countryside and in rural communities? In the Prime Minister’s statement yesterday—which we all welcome, by the way; it would be churlish for anyone not to welcome it—he set a positive scene and laid out his vision for the United Kingdom. He mentioned hope, which was one of the words that I took from his statement—I was there for his statement but not for all the answers to Members, because there were other things to do. We must ensure that policies are rural-proofed. My real fear is that we are not doing so and that the losers are the most vulnerable and isolated communities. Economies of scale and isolation issues must be weighted when balancing the books.

I look forward very much to the Minister’s response to address this issue for each rural area, and thank him for his response to the debate. How will the Government deliver support for upper-tier local authorities? That is the question the hon. Lady put forward, and it is the one I am asking as well.

15:02

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

It is an honour to serve under your chairship, Mrs Barker. I thank the hon. Member for North Shropshire (Helen Morgan) for securing this debate, which is important and relevant to me.

I will probably shorten my speech a little, as the Minister is getting a double dose of Cornwall this afternoon—I apologise for that. We underwent major local government consolidation early in Cornwall. We became a unitary, from a county council and six districts, in 2009. We are now the third largest unitary in the country by population and the fourth largest by area, but the 12th least densely populated of the 62. That creates quite unique opportunities, but also challenges.

I want to talk a bit about third-tier councils, because the establishment of our large unitary coincided with austerity. The council withdrew from quite a lot of services—all but the most statutory, really. That meant that the third-tier town and parish councils stepped up and took the reins, preventing the sell-off and closure of all sorts of things, such as green spaces, toilets, libraries and leisure centres—so much of the infrastructure that made our town special. It is great having services run by the people who live there and use them, but there are issues that need sorting out.

When third-tier councillors’ councils grow, they still get no pay or expenses. We also have conduct issues clogging up the desks of upper-tier council monitoring officers, who do not have the teeth to sort them out. Precepts in towns have grown significantly larger than in rural parishes. People on one side of a road might be paying £30 for their precept, while those on the other side are paying for everything in the town, so their precept could be £400-plus a year, and obviously those parish residents will still rely on those services.

Although third-tier councils are now big in Cornwall and have big budgets—£5 million or £6 million—they are still not recognised or trusted to get external funding. Everything has to come through the unitary, which can lead to a parent-child relationship. In the previous White Paper, we had the support of the previous—and now current—Secretary of State for sorting some of those issues out, as well as things like remote voting and meetings for third-tier councillors. I really hope the Department will pick that up again for third-tier councils.

On devolution, obviously the Prime Minister made a statement yesterday, which was very welcome. The focus on further devolution and growth in every postcode is very welcome to those of us in places like Cornwall. We did have a devolution deal back in 2015. It was the first non-metropolitan devo deal. We got a level 2 deal in 2023. There have been a number of situations in which we have benefited quite a lot. On public transport, for example, we got the power to franchise buses and make enhanced partnerships back in 2015.

So far, we have gone into enhanced partnerships, but we are now running a pilot to see how franchising could work in rural areas, where it is much more difficult to make it work. We picked it up and ran with it. We were the first rural area to introduce smart ticketing, for example. It will be interesting for us and North Yorkshire to see how franchising could be possible in a rural place.

Devolution could also be really important for housing. We are working towards a memorandum of understanding with Homes England, but a full strategic place partnership would also be helpful and important to us. Turning to economic growth, we lost all our EU funding in 2020, which led to a real slowdown in our growth. We did have the shared prosperity fund, but that is now finished. We had access to the Kernow industrial growth fund, which was fantastic, but we continue to need economic growth support in emerging areas, which chimes and aligns very well with the Government’s industrial strategy.

The Prime Minister has been talking a lot about the devolution of post-16 skills. In Cornwall, we know our businesses—so does the council, and the further education providers. That could work really well for us, so I am really excited to talk about a future devolution deal with the Prime Minister, as well as making the epic trip to Manchester and going to No. 10 North.

Although devolution is an exciting example of progress, it cannot overcome the financial pressures facing our more rural councils. We have heard some examples of things that cost more. Cornwall’s core spending power fell between 2010 and 2018 because of austerity and that Conservative Government, but funding has improved since then and the Government have made efforts to create a fairer funding settlement. Nevertheless, we are still below others in real terms. We have also used the second homes council tax premium, which brought in around £23 million, but even with that we remain in that position.

Rurality and peripherality make things cost more. We have heard some examples already, but I want to mention temporary accommodation, as a room in a Travelodge costs £50 in the winter and £100 in the summer. Meanwhile, home-to-school transport is crazy expensive. We cannot use buses and end up using taxis, and there are long distances involved, which makes it difficult. Furthermore, contracts for emergency accommodation also go through the roof in the summer. In children’s social care, there are very few providers and contracts get very few bidders. It is very difficult and we end up having people placed out of Cornwall, which is a very long way to go and is not good for the population.

There is also a population increase in the summer; we get about 4 million visitors. That is fantastic and it is good for our economy, but it increases demand on vital services, particularly on things such as environmental health, waste collection and emergency services, as well as public amenities. Something like an overnight visitor levy could be used for that, and we are quite excited about the potential for that to be devolved.

In conclusion, Cornwall highlights the opportunities and the challenges of rural upper-tier authorities. We are further down the line than a lot of other authorities—we have had a unitary authority for a long time—and we have seen where that takes us, particularly having lost services that are then picked up by the third tiers. Devolution will be good for us because it will mean that those decisions are taken locally, but for rural authorities to really thrive, that funding needs to reflect the additional costs and pressures of where we are in those sparsely populated areas and the fact that transport in particular is so difficult for us.

15:09

[Edward Morello (West Dorset) (LD)]

It is an honour to serve with you in the Chair, Mrs Barker. I congratulate my hon. Friend the Member for North Shropshire (Helen Morgan) on securing this important debate. My very good friend, my hon. Friend the Member for Didcot and Wantage (Olly Glover), warned earlier against pitting different parts of the UK against each other. At the risk of flying in the face of that advice and angering the hon. Member for South West Norfolk (Terry Jermy), I will just say that West Dorset is the most beautiful place to live.

My rural community shares a lot of the same difficulties as everyone else here. My constituents are spread across small towns and villages, so distances are longer, there are fewer service providers and councils have fewer opportunities to achieve economies of scale. Almost half of Dorset’s residents live in areas that are among the 20% most deprived nationally in access to services. Whether it is GPs, dentists, post offices, shops, primary schools, access is much more difficult than in urban areas. As has also been highlighted, waste collection is difficult, vehicles have to travel further, highways teams have to cover more miles, social care workers have to spend more time travelling with patients, and a child with special educational needs has to travel a larger distance to reach the right school.

At the same time, Dorset has one of the oldest populations in the country: 31% of residents are aged 65 or over. Although I have repeated it many a time, and it may well not be true, my favourite fact about West Dorset is that if we were a country, we would have the oldest population in the world—we would be older than Japan. That matters because an ageing population creates additional demand for adult social care and other council services.

The Government have increased funding for local government, which is welcome, but our councils are still dealing with years of financial pressures and cuts alongside inflation, demographic change, the national living wage and increased national insurance costs. That was compounded by the change in the fair funding review 2.0 to remove rurality from all grant formulas bar adult social care.

The cost of providing home-to-school transport for children with special educational needs has risen 33% since 2016-17. Dorset has the seventh highest weekly cost for children with SEND of any authority in England. Children can live a long way from the specialist provision they need, with fewer available capable specialist providers, and transport costs more. The same applies to adult social care. There are fewer providers willing to operate across rural areas because travelling between clients takes longer. Those providers that do operate in rural areas can charge more to cover the additional time and transport costs. The council has more roads to maintain, more miles to travel and more dispersed communities to serve. A funding formula that treats rural and urban areas the same does not produce a fair outcome, as has been highlighted.

In West Dorset, bus frequency has fallen by an astonishing 62% since 2010, and 10 of Dorset’s 14 towns have been identified as transport deserts or at serious risk of becoming one. Just over one in five people in large parts of rural Dorset cannot reach a town centre within 30 minutes by public transport, yet Dorset received just £3.8 million in the bus services improvement plan funding, compared with the £11.6 million allocated to our neighbours in Devon. The funding formula needs to recognise rurality, population age, visitor number increases and accessibility needs.

We also need to look at the future of Dorset and the wider Wessex region. Since 2025, Dorset council has been working with Bournemouth, Christchurch and Poole council, Somerset council and Wiltshire council through the Wessex Partnership. Wessex has a population of almost 2 million people, and it already works together across areas including defence, clean energy, digital and life sciences. The partnership has developed a shared regional vision and is preparing to take on greater devolved responsibility.

The Government’s current devolution framework will create different levels of opportunity depending on which model an area achieves. It is estimated that mayoral strategic authority status could provide around £460 million in additional funding each year across the Wessex region, which is about £245 per resident, as well as an estimated £16 billion of additional economic output over 30 years. If other parts of the country receive powers, greater flexibility and greater funding, Wessex needs to be able to compete on a level playing field. I would ask that the Minister agrees to meet the Wessex Partnership to discuss devolution for Wessex.

If the Government want economic growth in every postcode, funding formulas need to recognise the real costs of rurality, ageing populations and providing services across large geographical areas. Rural communities should not receive less because delivering services simply costs them more.

15:14

[John Milne (Horsham) (LD)]

It is a pleasure to serve under your chairship, Mrs Barker. I congratulate my hon. Friend the Member for North Shropshire (Helen Morgan), and I declare an interest as chair of the all-party parliamentary group for rural business and the rural powerhouse.

This Government have rebuilt the local government funding formula and launched an ambitious devolution agenda, both in the name of fairness and moving power closer to the people. I question how that is working. Ministers say that the new funding formula matches money to need, and that by the end of the settlement, the most deprived places will receive 45% more funding per head than the least deprived. Nobody disputes that deprivation matters, but measuring deprivation in rural areas is not straightforward. According to the County Councils Network, county authorities will receive only £345 per head in grant funding against a national average of £526, and will therefore have to find more than 90% of any budget increase from council tax alone. That means they will receive roughly 2p of any additional Government money for every £1 of new cost pressure, while metropolitan boroughs will receive 42p. That is an enormous difference.

Although individual councils vary, the Rural Services Network shows that rural residents already pay 70% more council tax per head than urban residents, despite lower wages on average. That gap is projected to widen every year of this settlement. As others have pointed out, the Government removed the remoteness indicator from every part of the funding formula except adult social care. How does a remote child cost less to reach than a remote adult? Part of the current recovery grant is also still allocated using 2019 deprivation figures, even though updated 2025 data already exists and is used elsewhere in the very same formula. That makes no sense and perhaps the Minister can explain.

There is an unspoken assumption that needs correcting: rural does not necessarily mean rich. Research into so-called pretty poverty in Cornwall shows real deprivation hidden behind a scenic view. Measures built to track deprivation in cities simply fail to spot it. The Government’s new devolution programme has the same design fault. Evidence that I have heard this year from rural bodies and local leaders is consistent. Combined authority structures, funding pools and business rates growth incentives were all built around city region economics first and do not necessarily work in the same way in rural areas.

One flagship funding tool, full retention of business rates growth, was piloted in Greater Manchester. Will the Minister say whether that model has been tested where the business rates base is small and slow growing, as it typically is in rural England? Again, in honour of my Cornish colleagues, Cornwall tried a version of full retention in 2018, and it had to give up its rural services grant as the price of entry. I would not want rural authorities steered towards a tool that rewards growth but lacks the tax base to successfully generate it.

If the Government are serious about devolution, it has to mean something for parish and town councils, not just mayors and unitary authorities. There is no proper funding settlement and no training offer for the clerks and officers who will be increasingly asked to take on responsibilities that have been devolved down from a disappearing district tier, as in my area of Horsham. With the best will in the world, they are not properly equipped for that.

The fundamental assumption of the fair funding formula is that more deprived, mainly urban authorities have had a raw deal compared with rural shire counties, but the clear fact is that every type of council has been struggling over a long period. My county council of West Sussex is carrying almost £200 million in debt under its dedicated schools grant for special educational needs. Even with the proposed 90% reduction in SEND debts, which is welcome, that still leaves £20 million to be stripped out of a general budget that is frankly already buckling under the strain. The Government’s policy risks forcing yet more cuts on services that have already been cut too far. Two thirds of spending in West Sussex is ringfenced, which means portfolios such as highways or buses—transport—have to bear the whole burden of any savings.

The new funding formula risks condemning councils across the country to failure, but they are mostly not Labour councils and it is hard not to see a political angle. Does a pothole cost more to fix in a deprived area than in a wealthier one? No, it does not. The cost of many council services is not related at all to deprivation, so it is wrong to build an entire funding formula around that one criterion. Local councils are not the main cause of deprivation, and neither can they be the main fix. This Government promised to help working people and to devolve power. Rural authorities are still waiting. I hope the Minister will commit to using 2025 data consistently, to reinstating remoteness across the whole formula, and to properly funding and training parish and town councils so that devolution reaches the communities it is meant to serve.

15:20

[Caroline Voaden (South Devon) (LD)]

It is a pleasure to serve with you in the Chair, Ms Barker. I thank my hon. Friend the Member for North Shropshire (Helen Morgan) for securing this important debate.

Before moving to rural South Devon in 2007, I had spent all my life living in and around major cities: Edinburgh, Sheffield and then London. After nearly 20 years living in the rural south-west, I can honestly say that I had previously not understood rural life because I had not lived it. I have since come to realise that the rural-urban divide is possibly one of the deepest divides in our country and one that is too often overlooked, especially by Governments made up of city and urban MPs who simply do not understand the reality of rural communities and fail to see the deprivation that lurks behind the hedgerows.

Those communities are often forgotten when spending decisions are taken despite a set of circumstances that mean we desperately need the Government’s financial backing. Incomes are lower due to the older average age, jobs are often seasonal and low-waged, people in rural areas travel almost twice as far as those in urban areas, and there is often no public transport. Healthcare is a challenge because community services have been cut, hospitals are miles away and hospital transport has all but disappeared. High-speed internet is crucial when services are scarce, yet broadband connectivity lags far behind urban areas. Banks, pubs and post offices are closing, hollowing out communities and increasing rural isolation. As the hon. Members for Camborne and Redruth (Perran Moon), for St Austell and Newquay (Noah Law) and for Truro and Falmouth (Jayne Kirkham)—all of them from Cornwall—have said, the high number of second homes, high house prices and low wages massively exacerbates the housing affordability crisis. In Devon, the full-time salary to house price ratio is 10.6:1—well above England’s average of 8.7:1.

Despite all that, funding is persistently driven into urban areas while rural communities are left behind. The previous Conservative Government forced councils to do more with less. Their policy to force local authorities to use their reserves to subsidise their revenue expenditure was deeply wrong and, as a result, six rural upper-tier local authorities are on the brink of issuing section 114 notices, which would effectively declare them bankrupt.

The current Government have committed to providing multi-year funding settlements for local authorities, which we welcome, but for rural communities the 2026-27 to 2028-29 settlement falls well short. The withdrawal of the rural services delivery grant was a huge blow to councils in Devon, costing about £14 million, and no rural councils benefited from the replacement funding or recovery grant.

The new formulas mean that local authorities in cities will have higher spending power than in previous years while rural shire districts will have less to spend. Under the local government finance settlement for this year, urban councils will receive 32% more per head in Government-funded spending than rural councils. Devon county council will receive £1,056 in core spending power per head compared to Hackney council’s £1,645 or Liverpool city council’s £1,598. It does not cost 50% more to provide services in Hackney or Liverpool than in Devon. In fact, I would argue it potentially costs less because of the rurality.

Furthermore, the Government’s 2026-29 local government finance settlement does not include any explicit support for rural upper-tier authorities. The new formula has included remoteness only as an uplift in the formula for adult social care. As my hon. Friend the Member for Horsham (John Milne) said, a rural child is not easier to service than a rural adult. It is utterly shocking that the Government do not believe that remoteness is relevant to the delivery of any other service, such as school transport or waste collection.

It goes way beyond the additional time it takes to travel. Rural councils have several other considerations that urban councils simply do not have to contend with, including requiring more service centres due to the spread-out population and more professionals to cover visits across a huge rural area. They receive fewer responses to contract tenders, perhaps only getting one from the incumbent provider, which leads to a market with increased prices for services.

There are physical constraints such as needing smaller refuse vehicles, especially on the narrow lanes near where I live in Devon. Those vehicles have to return to base to be emptied more often, and rural areas also need multiple depots for equipment and vehicles. Thus, they need more equipment to service the streets and more drivers.

Pockets of deprivation, often hidden by prettiness, are particularly hard hit. Social mobility for young people living in deprived rural areas is one of the lowest in the country. None of this is considered in the new funding formula outside of adult social care. I urge the Minister to review that.

Quite simply, the new system of allocation does not recognise that the sparse and isolated nature of rural areas drives higher costs for the delivery of essential services, creates challenges in recruitment of staff for key services and requires local authorities to provide a greater public subsidy for the provision of public transport. This is very much in keeping with a Labour Government that have persistently failed to acknowledge that every service is harder to deliver across rural areas.

Let me use Devon to illustrate why this service delivery is so tough. Rural Devon is a drive of over 100 miles from north to south. It would take me 10 hours to walk across just my constituency, which is a fraction of the county, and nowhere near the biggest. I am not sure how Manchesterism will translate to rural areas, but we cannot apply the same principles to a city of 3 million people and villages with just 10 houses and expect to see the same results.

The trajectory for rural councils over the next three years is deeply concerning. The very limited increase in Government funding will require service reductions or significant increases in council tax or business rate income to maintain core spending power. As has been said, rural residents will pay 17% more in council tax per head compared to urban residents this year, yet Government funding will be directed towards urban authorities.

The Government are relying on a regressive council tax to fund services in rural areas that it was never meant to. As a result of this funding settlement, by 2028-29 urban councils will have seen a 20% increase in Government-funded spending power, compared to only 2% for rural councils. How can that be fair? These are not just numbers on a spreadsheet; we are talking about people’s lives. From the growing number of children with SEND who cannot access the support they need to the closing of vital community spaces like libraries and leisure centres, this lack of funding has a real impact on people.

We are concerned by the Government’s decision to allocate additional funding within the local government finance settlement on a need and demand basis. It will jeopardise the sustainability of rural local councils. The Liberal Democrats oppose the three-year local government finance settlement, which does not go far enough in providing a truly fair funding settlement to all local authorities across the board. We urge the Government to provide rural councils with a funding settlement that reflects the true impact of rurality and sparsity of the areas they serve through the application of the fair funding formula.

The ability to provide services to people in my constituency and across rural Devon will only be made worse by the proposal for four unitary authorities recently chosen by the Government for the local government reorganisation in Devon. I urge the Minister to bear with me on this. That proposal from Labour-run Plymouth and Exeter will see those two cities massively expanded, to the great delight of their Labour MPs, and a new urban growth area based around Torbay, leaving a fourth authority—the bits that were left behind when the urban areas were gouged out—stretching 70 miles from Ilfracombe in the north to Salcombe in the south, but 100 miles by road. That authority will have to maintain a road network not dissimilar to the whole of Luxembourg’s with no major town to offer opportunities for growth and regeneration and the most deprived area of Devon to support.

[Helen Morgan]

The point of combined authorities is to derive economies of scale from placing urban and rural areas together. Some of those economies of scale can be driven by the density in the urban area. Does my hon. Friend agree that it makes no sense to split up the urban and rural areas in the way she describes?

[Caroline Voaden]

I absolutely agree. It makes no sense to any of us in Devon. I have spent the entire summer listening to constituents who are deeply distressed about what has happened, which leaves them in a rump rural local authority with no option for economic growth or regeneration.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

As a part-Devon Member of Parliament—the other part of my constituency is in Somerset—I entirely agree with what my hon. Friend is saying. The part of my constituency in Devon is 800 square miles and will form just part of an enormous rural authority. Does she agree that that authority does not have the fiscal power to sustain itself?

[Caroline Voaden]

I absolutely agree. The Government ignored local voices and went with the proposal that came fourth out of five in a public consultation, but was backed by Labour council leaders and Labour MPs who had the ear of Ministers and wanted to expand their cities. None of my constituents want it. I have spent the whole summer listening to distressed residents, as has my neighbour, the hon. Member for South West Devon (Rebecca Smith). The chosen proposal was a blatant prioritisation of economic growth for the cities of Plymouth and Exeter at the expense of the economic and social cohesion of rural Devon.

How do the Government expect this council to be financially viable when they deem remoteness irrelevant to the delivery of every service except adult social care, and when no one can even work out where the authority could be based? How can rural Devon expect growth in every postcode when there is clearly no consideration of the economic growth potential for rural Devon in the chosen proposal?

The Prime Minister talked yesterday about supporting rural areas and not creating a two-tier country, but the Government have created a two-tier Devon. I urge the Minister to listen to the many Devon MPs and the local people, go back to the drawing board on the reorganisation in Devon, look at the alternative options that were on the table, and pick one that will not leave rural communities struggling even more than they are now. If we are to have any hope of bridging the urban-rural divide, a fair funding settlement for rural councils and local government reorganisation that works for rural areas must be the start. If the Prime Minister wants a political system and economy that works for every person in the country, the Government must change the way they value and recognise rural communities.

15:31

[Lewis Cocking (Broxbourne) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Barker, and I welcome the Minister back to his place. I commend the hon. Member for North Shropshire (Helen Morgan) for securing this important debate and giving us the opportunity to speak about the rural areas that this Labour Government are neglecting.

My constituency is home to a handful of farms and the beautiful Lee Valley regional park. Although it might not be the most rural, I am well aware of the pressures faced by rural communities, which have been made clear by hon. Members across the Chamber today. Having started off with the infamous family farm tax, the Government are now moving on to implement the unfair funding review. This change in the funding formula for local government seems to have been designed with the express purpose of stripping away funding from rural areas just to hand it to urban ones.

[Noah Law]

Does the hon. Member recall the enormous slashing of the budget of Cornwall council under his Conservative and Liberal Democrat coalition Government?

[Lewis Cocking]

Lots of difficult decisions had to be made. I politely say to the hon. Gentleman that his party is in government now. We will see the mettle that they are made of in the coming months, when they have to make difficult decisions to produce their Budget, and we will also see how that goes down with the British people outside this place.

Many rural councils face real challenges across the board, and now they are expected to cope with even fewer resources. In my area of Hertfordshire, a semi-rural local authority, the county council is facing a reduction in funding of around £50 million a year. That is thanks to this Labour Government, despite the council already being under extreme pressure from an unfavourable SEND funding formula. Under that formula, Hertfordshire receives one of the lowest funding allocations per head. It would receive millions more if it were funded at the same rate as other areas.

When it comes to SEND, rural authorities lose out. Inner London boroughs receive thousands of pounds more in high needs block funding per pupil. For example, a child in Camden is allocated four times as much as a child in Yorkshire. It should not matter where someone is born in the country; children with special educational needs deserve the same resources. I am sure that all hon. Members from right across this House can agree with that.

Similarly, rural authorities have been ignored throughout this Government’s top-down local government reorganisation. As we have seen in Leicestershire, Nottinghamshire and other areas, rural towns and villages are now being absorbed into new unitary authorities dominated by cities. That will only result in rural areas being more marginalised and left even further behind.

[Perran Moon]

If His Majesty’s Opposition are so unhappy about the local government reorganisation, why is there not a single Opposition Member here to make that point other than him?

[Lewis Cocking]

I thought someone might make that point in this debate. I have been in debates where no Labour or Liberal Democrat MPs have turned up. When I go out and speak to my constituents about how, when they turn on the TV, the Chamber is not full, I explain to them that there are many calls upon Members’ time. I gently say to the hon. Member that some constituents will watch debates that he does not attend and be unhappy with that, so we could maybe think about that before we make interventions on that topic.

As I was saying, this Government’s top-down local government reorganisation has seen rural communities left behind. Rural communities and authorities have also been hugely hit with a high increase in housing targets, forcing them to build over the green belt and ruin the character of their areas. They have increased by up to 487%, while many Labour-run urban areas have seen their targets decrease. The new Prime Minister likes to talk about devolving power to every postcode, but the only changes that people in rural areas have seen are money and power being taken away from them. They are the people that this Labour Government should champion: the hard-working people who have too often been left behind. Instead, they are being sidelined and ignored. The Government need to take time to actually listen to the rural community and protect their way of life.

I may not represent a very rural part of this country, unlike other hon. Members in this room, who have so passionately spoken about their rural areas, but it does not take much to work out that forced local government reorganisation, increases in taxes and reduced funding formulas are the exact opposite of how the Government should support rural local authorities.

15:36

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jim McMahon)]

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.

[Perran Moon]

On that specific point, part of the reason why there is a conflation of devolution and the local government funding settlement is that, because our local councils in some areas are so deprived of funding, they have to get funding from something like a visitor levy, which would not typically be allocated for that, in order to supplement the services they need to provide. That is potentially why there is a mix-up of views about devolution and the local government settlement. Does the Minister recognise that point?

[Jim McMahon]

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 will explain a bit more on that.

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 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.

[Caroline Voaden]

The Minister says there is an area cost adjustment, and yet the leader of Devon county council says that Devon lost £14 million because of the rural services delivery grant, which was removed. How can those two things be true? If a grant that takes account of the fact that it is more expensive to deliver services in a rural area is removed and the council is £14 million short, the extra cost of rural services delivery has not been recognised.

[Jim McMahon]

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.

15:48

[Helen Morgan]

I thank all hon. Members who have come along and made excellent speeches—particularly team south-west, who have turned out in force. They all highlighted the difficulties in delivering services in sparsely populated areas with vast distances to travel. They spoke about the impact on highways funding, the importance of generating economic growth, the cost of delivering SEND, and the proxy creation of district councils through the re-empowering of town and parish councils to deliver things that the unitary council can no longer afford to deliver because they are not a statutory requirement. They were really good speeches.

I am very disappointed that the Minister wound up with a speech that kind of told us that everything is actually fine. On the day that the local government finance settlement was announced, I sat on the Opposition Benches, along with all my colleagues, without a clue about what my local authority had been awarded because it was not findable, we had not been told and it could not be googled, yet everyone on the Labour Benches appeared to know what their settlement was and congratulated the Minister on its delivery. That is symptomatic of a pattern of this Government. They tell rural areas, “Everything is fine. It looks pretty. Go away and stop worrying, and actually, we are going to focus on urban areas.” We all recognise that urban areas need investment and are not thriving as they should be—this is not about pitting one area against another—but rural areas need fair funding and devolution. In a council that has stripped back every single employee that it can, there is no capacity to generate economic growth or transform the underlying financial structure of the council, because nobody has the time in the day to do it. They need that devolution funding to rethink how they deliver services in a sustainable way for the future. I hope the Minister will take those points on board.

Question put and agreed to.

Resolved,

That this House has considered Government support for rural upper tier local authorities.

15:50

Sitting suspended.