The Rural Services Network (RSN) has conducted an initial analysis of the recent Provisional Local Government Finance Settlement and is deeply concerned about the implications for England's rural communities. While the government promised no reductions in Core Spending Power, many rural authorities saw no increase to their Core Spending Power.  This stagnation contrasts sharply with the substantial increases experienced by some urban metropolitan areas - some of which saw increases of almost 10%. This variability in changes to spending power continues to significantly disadvantage rural areas.

Our findings indicate a continuation of the troubling trend from last year, where urban areas received substantially more in Government Funded Spending Power compared to their rural counterparts. Specifically, urban areas benefitted from 36% more funding, while rural residents paid 20% more in Council Tax per head. This year’s figures are expected to further highlight these disparities.

The latest figures for 2025/26 reveal that urban authorities receive 41% more in government funded spending power per capita compared to rural areas. This disparity has widened from last year, highlighting the growing inequities in the distribution of government support. Furthermore, despite receiving significantly less government funded spending power, rural residents continue to pay 20% more in Council Tax per head than their urban counterparts, exacerbating financial inequities.

This financial approach not only overlooks the hidden deprivation faced by our rural communities but also threatens their economic potential. Rural areas, often perceived as affluent, are in fact zones of significant, yet unrecognised, hardship. They pay disproportionately more for services with consistently less government support, a situation that this year’s settlement exacerbates. Moreover, the 0% increase in Core Spending Power effectively means that any rises in council tax for rural areas will not translate into additional services but merely replace lost government funding. This, coupled with the absence of provisions for inflation, salary increases, or growing service demands, forebodes inevitable cuts in frontline services across rural areas.

The RSN is calling for immediate action to address these imbalances. As rural areas are pushed from being communities with potential to thrive to ones struggling to survive, it becomes clear that the current funding model is unsustainable. Our detailed response to the consultations on the provisional settlement and local authority funding reform, set to close on 15 January 2025 and 12 February 2025, will outline necessary reforms to support equitable growth and sustainability in rural England.

Statement from Kerry Booth, Chief Executive, Rural Services Network: "As the Chief Executive of the RSN, I see firsthand the challenges and growing deprivation that rural communities face due to disproportionate funding models. This year’s finance settlement not only continues to neglect these areas but also sets a precarious path towards diminishing local services, which are essential for our rural populations. While we strive for fairness in funding allocations, our advocacy is firmly rooted in ensuring that rural areas are not overlooked. The current funding models need urgent reform to prevent further deepening of rural deprivation. It is crucial for the vitality of England's rural communities that we achieve a funding system where rural areas receive the resources they need to provide the essential services their residents deserve".

Statement from Sarah Dyke, MP for Glastonbury & Somerton, Chair of APPG on Rural Services: "As chair of the Rural Services APPG, I am extremely concerned that the Provisional Local Government Finance Settlement will not go anywhere near far enough to fill the huge funding gaps rural councils are experiencing. This was a real opportunity for the Government to address the historic funding inequality rural areas have experienced. But unfortunately, it looks like this settlement will be more of the same: continuing to prioritise urban areas and failing to recognise that sparse and often isolated rural areas have higher costs for the delivery of essential services. It is shocking that the Rural Services Delivery Grant will no longer be available to support the most vulnerable people in rural communities. Combined with the decision to repurpose the Rural Funding Grant, the Government’s plan seriously threatens the survival of some rural councils who are already stretched too thin and may mean they are unable to deliver essential services. Removing the Rural Services Delivery Grant and replacing it with funding based on “need and demand” will skew funding allocations away from rural areas which need it most. Deprivation in rural areas would also likely be hidden through the use of this measure because it occurs over a wider geographical area. With one fifth of the UK population living in rural areas, this Government must step up and recognise the unique challenges their local authorities face and provide them with fair funding to secure a future where rural residents can thrive. I urge the Government to provide rural councils with a funding settlement which reflects the impact of rurality and sparsity of the areas they serve, through the application of the fair funding formula."