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Call for clarity on local government finance

Rural Councils have called for clarity on the future for local government finance and an end to unfair funding for their areas.

The Rural Services Network issued the call on behalf of local authorities after the Local Government Finance Bill was omitted from the government's legislative programme for at least two years, as set out in the Queens Speech voted through Parliament on Thursday (29 June).

Rural Local Authority Finance Chiefs and Councillors came together earlier this week to discuss the current situation and how it may affect them moving forward.

    See also: No finance bill in Queen's Speech

Local Government was due to be required to adopt a 100% Business Rate Retention Scheme to replace Revenue Support Grant by 2020/21 as the mechanism for funding local services.

But authorities are now waiting for the government to set out in detail the approach (and timetable) to Local Government Funding post 2019/20 – less than three years away.

Rural Services Network Chief Executive Graham Biggs said: "Local Authorities need certainty to enable them to plan their budgets and spending.

"One of the aims of 100% business rate retention was to encourage economic growth and to incentivise areas to support economic development in their local area.

"However, some rural areas are constrained by such things as National Parks and Areas of Outstanding Natural Beauty which can make development more challenging."

Protection and planning regulations for their local rural landscapes can make it much more difficult for many rural areas to be able to develop in the same way as in urban areas and the amounts generate from business rates much less.

Mr Biggs said: "The Rural Services Network would like to see a funding mechanism that takes into account the needs of the local area.

"It welcomes the continuation of the Fairer Funding Needs Review but points out that the balance in the formula between needs and resources needs to be watched closely."

RSN has long argued that the Government's approach to funding rural areas is unfair and has historically put rural Local Authorities at a disadvantage due to receiving significantly lower government grant.

Rural local authorities received 45% less government grant per head of population in the current financial year (2017/18) than their urban counterparts – this gap in funding is due to grow even wider under the current four year finance settlement; indeed it is becoming a chasm.

Moreover, in 2017/18 Council Tax is on average £87 per head of population higher in rural areas compared to urban areas – that gap too will grow over the period to 2020/21 under current plans.

It is, in effect, government policy as set out in the four year settlement that rural residents should pay significantly more by way of Council Tax to fund local government services than urban residents.

Cllr Cecilia Motley, RSN Chairman, said: "This is nothing less than a grossly unfair and unacceptable situation which should not be allowed to continue for even one more year.

"Rural areas have a higher percentage of older people resident in their areas, often living in social isolation, which increases demands on services. The brunt of this burden falls on Adult Social Care Services the funding of which is acknowledged to be in crisis.

"It costs more to provide Adult Social Care Services – and indeed most, if not all, other services provided across large rural areas..

"Rural Local Authority leaders want clarity on what happens next and when.

"They demand a fair system which allocates funding according to need, and the costs of meeting that need with the reliance on Council Tax to contribute towards the costs equitable as between rural and urban residents in the amounts they pay per head."


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