Rural local authorities are set to lose one third of their funding from central government following the Provisional Local Government Finance Settlement for 2018-19.
RSN chief executive Graham Biggs MBE issued the warning as he and other RSN representatives met local government minister Rishi Sunak to discuss issue.
See also: Pressure mounts over fairer funding
Under the original Four-Year Final Local Government Settlement, rural areas were set to lose over 31% of their central Government funding, while urban areas would lose just 22%, said Mr Biggs.
But the recently announced Provisional Local Government Finance Settlement for 2018-19 made the situation even worse.
Mr Biggs said: "Rural residents get a really rough deal.
"On average, they earn less than their urban counterparts and pay more in council tax – but receive less government grant and receive fewer services which cost those residents more to access.
"In addition, rural residents pay some £3000 more per annum for essentials than their urban counterparts."
Rural areas had long been unfairly treated and underfunded when it comes to Local Government Finance Settlements, said Mr Biggs.
Rural areas also had significantly larger older populations than urban areas.
This contributed to higher costs when it comes to delivering public services, including social care, to sparsely populated communities.
It was also grossly unfair that rural residents were expected to pay for more of their local government services through council tax than their urban counterparts.
Mr Biggs said: "The Provisional Settlement reinforces the view that there appears to be a conscious policy decision by the government that rural services should be increasingly funded by council tax payers."
This meant there was an unacceptable widening in the gap in Government Funded Spending Power between predominantly urban and predominantly rural areas, said Mr Biggs.
With delays in introducing a new fairer funding formula, there was a clear need for the government to extend transitional arrangements to ease the pressure on services .
Mr Biggs said: "'These deeply held concerns were put by the RSN directly to Local Government Minister Rishi Sunak.
"As an MP representing the largely rural constituency of Richmond, North Yorkshire, it was clear that the Minister is well versed in the problems faced by rural authorities in delivering services in a continuing climate of austerity.
"Mr Sunak recognised RSN's role in championing rural areas and campaigning on behalf of rural authorities as they struggle to mitigate the effects of years of budgetary constraints."
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