Alicia Kearns is the MP for Rutland and Melton.
Over the last year, our local councils have pulled off Herculean efforts to help our communities survive the pandemic. In Rutland and Melton, our local councils have swiftly distributed grants to businesses, provided urgent support to those most in need, and played a major role setting up rapid testing facilities and vaccination sites.
On top of this, they have kept the normal business of local government running and helped enforce the various public health guidelines that keep us safe.
In my case, the pandemic has been a reminder of how efficient and effective local councils can be, and how that should be rewarded in future funding settlements.
Despite running some of the most efficient councils in the country – Rutland manages to be ranked first in adult social care while also having one of the smallest per capita spends of a unitary authority – the East Midlands has some of the least well-funded councils in the country. Spending is only £8,879 per head, ten per cent lower than the UK average. This is despite East Midlands authorities often serving large rural areas like mine which is far more expensive. Meanwhile, Leicestershire has been named as the most productive county for three years in a row – keeping costs down while maintaining services.
Rural councils continue to have significant gaps in funding levels unrelated to their underlying requirements. If Leicestershire County Council was funded at the same level as Camden, it would receive an additional £350 million a year. If LCC was funded at the same level as Surrey, another rural and suburban council, it would receive an additional £104 million. That doesn’t mean that the solution is simply pouring more money into local councils with no questions asked. The fairer funding review should be a cornerstone of our levelling up agenda. Because to truly level up, we must grow our rural areas, so that they can generate the development and tax base necessary to provide better public services. But this often requires front-end investment to unlock opportunities.
For example, authorities throughout the East Midlands have been working together to expand the A1, which, at the moment, becomes easily congested, redirects traffic through town centres, and causes significant productivity losses throughout the East Midlands. Yet, cost-benefit analyses devised by the Treasury have historically failed to capture the potential development opportunities provided by a larger and more accessible A1, and so for many years, local councils have dealt with increased infrastructure costs in their local roads, adding further to the difficulties in providing adequate services in local areas.
We should be proud that our Conservative Government has taken these issues seriously, and changed Treasury models to make sure the strategic case, rather than a rigid cost-benefit analysis, can be used to invest in the most important infrastructure projects.
That’s not to say old-fashioned Conservative fiscal prudence should go out the window, far from it. Instead, councils should be rewarded for their diligence. In Rutland and Melton, my councils are some of the most efficient in the country. Unfortunately, the current funding model looks primarily at past spending levels, so instead of being recognised for their fiscal rectitude, councils are expected to make do with historically low funding levels. We thus end up in the bizarre situation where inefficient Labour councils aren’t incentivised to improve, and Conservative councils aren’t recognised for their leadership.
This is particularly frustrating when the East Midlands is an area of strong potential growth for our country and governed by some excellent Conservative councils.
That is why the Government’s announced Fairer Funding Review is so important. It is a real opportunity for the Conservative Party to rebalance local government spending, and make sure that every citizen, wherever they live, has access to similar levels of local services.
The Government has already taken important steps to build a more equitable country. Changes to the green book will help unlock projects that bring meaningful strategic and regional benefits, like improvements to the A1 – a major artery of our country. The £100 billion in new capital investment, as well as the roll-out of new rural gigabit vouchers will further empower our rural communities and provide the economic opportunities they need to raise incomes and create businesses.
However, if local councils aren’t able to provide high quality, comprehensive local services because their funding levels can’t accommodate rapid growth in the short and medium-term, much of this work will be undone. Every major piece of infrastructure requires an accompanying commitment to provide local services. There are too many instances where local councils are constrained by short-term budgetary considerations and, as a result, miss out on the opportunity for long-term growth. This is completely understandable though, in the context of uneven local authority funding that has persisted for generations.
Our local councils create the conditions of growth by building communities that are well served and that people want to live in. As Conservatives, we should not only ensure the fairer funding review rewards efficient councils, but also ensure the additional costs of providing services in rural areas, and for smaller councils, are tackled once and for all. Fairer levels of funding will truly unlock the levelling up agenda and power our recovery from the pandemic.