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A report launched by the Rural Services Network this week reveals some startling inequalities in the way that central government allocates funding to local councils. The report, produced by independent local government finance consultancy,  LGFutures, shows that people living in the countryside are, on average, getting 50% less government grant per head of population than their urban counterparts

This is not the end of the problem. In fact it is only half of it. Not only do rural councils receive less money per head, the services that they have to provide for their residents cost more to deliver.

For example, it can cost up to 224% more to provide recycling and waste collection services in sparsely populated rural communities due to the greater distance of land covered. Provision of domiciliary care services can cost up to 98% more.  There is some recognition in the funding formulae for the costs associated with sparsity but they are woefully inadequate and there is no such allowance at all for upper tier EPCS services.

Returning to the subject of government grant,  Hammersmith & Fulham, for instance, gets an average grant per head of £ 860.64; Kensington and Chelsea gets £753.73 and Hull gets £713.17.  Contrast those figures with Shropshire (£407.66) and East Riding of Yorkshire (£373.61).   Can it really be the case that it costs Kensington and Chelsea £346 (85%) more per head to provide services in than in Shropshire?
The report also found that rural residents are paying on average 21% more council tax. In Shropshire the average Council Tax paid is £456.22 and in  Hammersmith & Fulham it is £378.15. In East Riding it is £440.34. To put it plainly, residents of rural Shropshire and Yorkshire are getting ripped off by the government’s funding formulae. They are paying more tax to get fewer services.

In response to our report on Monday a DCLG spokesperson said: "The local government settlement is fair between different parts of the country - north and south, rural and urban, metropolitan and shire”. CLG needs to explain to rural communities how these outcomes can possibly be fair.  
This issue, however, goes beyond a simple call for fairness. The rural economy contributes billions to the UK exchequer. If Britain is to recover from the global recession and develop a diverse and strong economy without a reliance on financial services then we must invest in rural communities as they can play a leading role in this. We must be encouraging skilled workers and SMEs to locate in the countryside rather than punishing them because of it.

The Department for Communities and Local Government is currently reviewing the mechanisms with which funding is allocated as part of the Local Government Resources Review. These complex formulae have some inbuilt factors that take into account sparsity; however they are woefully inadequate and fall well short of the additional cost of service provision.Part of this review will be examining localisation of business rates. We have begun a campaign calling on the DCLG to use the Local Government Resources Review to reverse these inequalities rather than enshrine them for ten years. At present Kensington & Chelsea gets over £19.5m more in grant than the needs formula says they should. This is through what is called “damping” this would also be locked in for 10 years in one of the options under consideration
We do not expect to see a revolution in government policy nor are we calling for one. We are asking for basic fair treatment of those who live in the countryside by the government, many of whom represent rural seats.


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Written by Cllr Roger Begy   
Tuesday, 13 September 2011 10:29
Last Updated on Tuesday, 13 September 2011 10:39

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