Funding settlement is 'fundamentally unfair'

The government's provisional funding settlement is fundamentally unfair for rural communities, the Rural Services Network has warned.

The network outlined its concerns to the proposed settlement in response to a government consultation on the issue which closed on Friday (15 January).

The network's full response to the consultation can be seen here.

The government proposes to allocate central funding so councils delivering the same set of services receive the same percentage change in 'settlement core funding' for those sets of services.

But the network said rural local authorities would be unfairly penalised by a shift in government funded spending power away from shire counties to metropolitan areas.

"There clearly has been a complete lack of rural proofing here," warned the network.

Changes to the funding formula had been applied at the last minute without consultation and reductions in funding had not been applied consistently across local authorities, it added.

Council tax was already significantly higher per head of population in rural areas compared to urban due to historic underfunding of rural services by successive governments.

It was unthinkable that the gap in government funding per head of population between urban and rural areas should increase during the life of this Parliament, said the network.

"We believe such a move will be unacceptable to them.

"To compound that by assuming the rural residents will have to pay yet more in council tax than do their urban counterparts is astounding."

Many councils had manifesto commitments not to raise council tax and the assumption that all councils will raise council tax to the maximum permitted was flawed.

"The government must think again on this issue of fundamental unfairness."

The network said it was grateful that the government had announced plans to grant the most rural areas an extra £20m in 2016-17.

But it said it was "extremely disappointed" that a promised extra £50m by 2019/20 over and above the £15.5m paid in 2015/16 is "back-end loaded".

The network said the government had implied there was £20m extra funding in 2016/17 when, in fact it amounted to just a £4.5m increase to £20m compared to 2015/16.

It also rejected the suggestion that the extra grant may be sufficient by the time that 100% business rate retention has been reached in 2019/20.

The network said that the Rural Services Delivery Grant should be increased to £130m by even increases over the four year settlement period.

This grant increase should be allocated proportionately to all authorities who had sparse areas to service and not just to those with super sparse areas.

This figure is the residual amount from the government's own calculations in 2012 about the additional financial burden that sparsity places on rural councils.

The network said it strongly objected to the principle of the New Homes Bonus being significantly reduced to support increased government funding into adult social care.

It said it recognised the importance of additional funding for adult social care but said it should be funded by new government funding to meet the needs of an ageing population.

The network said it was calling for the uniform local government cut to fall exclusively on the central government grant rather than on core spending power.


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