I will not take up too much time. First, I thank Ministers for the excellent work they have done over covid. We on the Isle of Wight have had an additional £100 million in the course of the past year in loans and grants to support businesses and individuals, and that money has flowed pretty quickly through the Isle of Wight Council. I am very grateful for the Isle of Wight chief exec, the council leader and, in fact, the entire team on the Island, who have done a great job.
I thank my hon. Friend Luke Hall for his attention to this matter and, indeed, the entire ministerial team, because I talk to them quite a bit on this issue. As he knows, we have been in discussions about the fair funding formula in regard to the Isle of Wight. It was mentioned in the fair funding formula review specifically as an island, recognising the potential additional costs, and that is the first time, as far as I can see, in modern local government history that the Isle of Wight has been recognised as an island. That is an important moment for us, and I am grateful to the Ministers who have been dealing with that, including the Chancellor when he was in a previous job.
It is hugely frustrating that the fair funding formula has been put on hold. We completely understand the reasons why. Clearly Ministers are acting in good faith when they say they have had to put it on hold because of the covid crisis, and they will look to get back to instigating that fair funding formula as soon as possible. Having talked to the Minister just this morning, I understand why we cannot tinker with the current system. Indeed, it would probably be illegal and open to challenge if they tried to do so and apply some additional fair funding formula to the Island now. I am grateful for what the Minister agreed this morning, which was a funding package that will be used for research to be conducted by Whitehall—by his Ministry—and the Isle of Wight Council to investigate the true additional costs of providing public services on the Island.
I know that the Minister is aware of the work of the University of Portsmouth, but I fully accept that, in order for the Government to make sure that they are spending taxpayers’ money wisely, it is right and proper that they commission additional work. Let me remind the Minister that the University of Portsmouth found three reasons why additional costs were needed to provide public services on the Island that are of the same standard as those on the mainland. First, there is the lack of spill-over of public services. For example, we cannot share a fire engine with Portsmouth until somebody designs a fire engine that can float on water, because we are separated from the mainland. Secondly, there are additional costs of providing services to communities on an island. There are not only additional transport costs, but issues arising from economies of scale, which mean that care home providers on the mainland may not necessarily want to set up on the Isle of Wight. Thirdly, there is the perceived separation factor that may prevent skilled workers either moving to the Island from the mainland or, indeed, moving from the Island to the mainland.
I am very grateful for the discussion that we had this morning and for the Minister’s promise of funding. I think that it showed great diligence and also creative thinking on his part. There is one thing that I should have asked him this morning. If we show that there are additional costs, which there undoubtedly are, and those are caused by our separation by sea, and the aim of the fair funding formula is actually to be fair, will the Government give me a commitment, within reason, that, if those additional costs are identified in the research that will be done by his Department and the council, those additional costs will be met? In terms of his budget, we are not talking about large sums of money. Even a few million pounds in additional costs would be very valuable for the Isle of Wight and for our local government, which is the smallest unitary authority. I echo the words of my right hon. Friend the Secretary of State who opened this debate that this is about fairness. If we cannot provide the same level of services as the mainland because of the additional costs of being an island, it is obviously important for those additional costs to be met.
I have one final point, which is partly relevant to the relationship with my right hon. Friend’s Ministry, but also with others. If the Government want to treat the Isle of Wight as being part of the mainland, they need to provide a fixed link. We are very happy being an island, but the dynamic of islands is different from that of the mainland. If we are given targets that effectively treat us as part of the mainland—be it for housing or for anything else—there is an understanding potentially that the Government need to connect us with the mainland. If we are not connected to the mainland, the Government need to understand that there is an island dynamic, which has an impact on us as a society but also on us economically.
For example, we have an unavoidably small hospital on the Isle of Wight. We need a hospital, because we do not have a fixed link to the mainland, but that hospital is not as economically viable as other district general hospitals, because our population size is different from that using other district general hospitals. That is just a generalised plea to this Minister and also to the Government that islands have to be treated and understood as islands. None the less, I am delighted and very grateful to the Minister for his call this morning and the agreement that we will have, I think, £50,000 to work on research to make sure that the Government are satisfied that the additional costs that we talk about on the Island are genuine and should therefore be a matter for public support.