Osborne admits failing rural areas

George Osborne
George Osborne
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THE Chancellor has admitted for the first time that Whitehall funding formulas discriminate against rural areas and do little to help tackle the hidden poverty that blights parts of the countryside.

George Osborne told MPs he accepts that long-standing mechanisms for funding local schools, councils and NHS services “have not been very good at tackling rural deprivation”, and said a debate is needed about how Britain divides its public spending between town and country.

The under-funding of public services in rural areas has been a persistent complaint of countryside campaigners, who say too much weight is given by Whitehall to the concentrated poverty found in large towns and cities.

Last month Beverley and Holderness MP Graham Stuart, who leads the Rural Fair Share campaign, presented petitions in Parliament from more than 100 rural constituencies across the country demanding increased funding for local authorities in remote areas.

Appearing before the Commons Treasury Committee yesterday, Mr Osborne said he accepted improvements were needed, and highlighted the Government’s forthcoming shake-up of schools funding as an area where long-standing rural discrimination will be addressed.

“One of the things these formulas have not been very good at tackling is pockets of rural deprivation,” the Chancellor said.

“For example, in the national funding formula for schools, we are looking at these issues where you can have two schools with the same number of kids on free schools meals – which is not a bad indicator of deprivation – and yet because one is in a rural area and one is in an urban area the rural school gets much less.

“That’s something we’re looking at in the formula for schools – and of course there’s a broader debate to be had. But I think you’re still going to end up in a situation concentrating resources in areas of greatest deprivation.”

The announcement on the new schools formula is expected within weeks. Mr Osborne suggested other areas of public spending could follow, but repeated that the most deprived areas will continue to receive the most support.

“The truth is that our urban areas do get relatively more public spending – but they tend to also have much greater health and deprivation problems,” he said.

“Now, that doesn’t mean that it’s perfect, and we can’t look at this... As a constituency MP in Cheshire, I know there’s always a debate about the amount of money per head of population that we receive compared to neighbouring Manchester – and I think there is room for improvement in some of these formulas. But fundamentally, we make a decision as a country that we spend more money in the most deprived areas.”

Mr Osborne also defended his controversial Help to Buy scheme for underwriting mortgages, insisting most of the people it has helped live in the North and Midlands.

“The early evidence from Help to Buy is that three quarters of those taken out are not living in London and the South East,” the Chancellor said. “The average house purchase they have been looking for is £160,000 – that’s below the national average.

“In other words, it is dealing with exactly the families we want it to help.”

Mr Osborne also revealed he expects billions of pounds more to be cut from the welfare budget in the next Parliament as the spending squeeze continues.

And he announced next year’s Budget will be held on March 19.

But under pressure from committee member John Mann, the Labour MP for Bassetlaw, Mr Osborne appeared unable to estimate the cost of filling the tank of an average car, repeatedly refusing to answer the question.