Rural Upper-tier Local Authorities

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.

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.

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.

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.