Rural England gets less government funding - study

A country lane
Image caption RSN said rural council tax payers paid more for fewer services

Rural residents of England receive 50% less in government grants than their urban counterparts but pay £100 a year more in council tax, a study suggests.

The Rural Service Network (RSN) study found predominantly rural authorities were given an average of £324 per head, compared to £487 for urban authorities.

The Local Government Resource Review must right the imbalance, the RSN said.

But the Department for Communities said councils were getting more power over spending and tax levels were "fair".

A spokesman said the local government settlement included a £650m fund to freeze council tax bills for one year "offering real help to families and pensioners across the country, including in rural areas".

"As we continue to deliver the most significant shift in power from officials in London to elected local councils in a generation, including proposals to allow councils to keep their own business rates, councils will gain unprecedented freedoms over how to prioritise their money," he said.

Business retention rates

The government is considering allowing councils in England to keep the business rates they collect rather than paying them into Treasury coffers.

Currently they are calculated and collected by local authorities and put into a central pool before being redistributed to all councils in the form of a grant.

Poorer areas, particularly in northern England, fear that the localisation of business rates could leave them much worse off because they lack a large economic base.

The RSN said it was also concerned that proposals on business rates retention might perpetuate the "unfairness" of the system.

The RSN study found council tax per head was almost 21% higher for predominantly rural authorities (£572), compared to predominantly urban authorities (£473).

But the RSN said that despite higher council tax levels, total "revenue spending power" was lower for predominantly rural authorities than predominantly urban authorities.

RSN chairman Roger Begy said the Local Government Resource Review was a "valuable opportunity" for the government to make the system fairer.

"This rural penalty means council tax payers in the countryside are forced to pay more, but receive less by way of public services in areas where earnings levels are much lower than the national average," Mr Begy said.

"When combined with the additional costs of providing services in rural areas this puts residents in rural communities at a significant disadvantage when compared to people that live in urban areas."

The disparity in funding was described as "extremely disappointing" by Conservative MP Graham Stuart, who chairs the All-Party Parliamentary Group on Rural Services.

"The government must reconsider how they distribute financial resources to local authorities by reforming what can only be described as an unbalanced funding formula," he said.

The RSN is a membership organisation which aims to "safeguard and improve services in rural communities across England".

Its members include councils, as well as businesses and voluntary groups. It commissioned independent consultancy Local Government Futures to carry out the study.

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