Government Responds To RSN On Fair Funding Concerns

The Rural Services Network (RSN) has received a formal response from the Ministry of Housing, Communities and Local Government following its letter raising concerns about the impact of Fair Funding Review 2.0 on rural local authorities.

In November, RSN Chief Executive, Kerry Booth wrote to the Minister of State for Local Government and Homelessness highlighting the removal of the remoteness adjustment from most local government funding formulas, retaining it only within the Adult Social Care Relative Needs Formula. RSN warned that this change risks under-recognising the higher costs of delivering services in rural and remote areas, where distance, sparse populations and limited infrastructure already place significant pressure on councils.

In its response, the Department stated that the current local government funding system is outdated and that Fair Funding Review 2.0 is intended to introduce a fairer, more evidence-based approach. The Government said that by the end of the multi-year settlement period, councils with similar levels of relative need should be funded on a more consistent basis, with most authorities seeing increases in Core Spending Power in cash terms.

The Department confirmed that updated funding assessments will continue to take account of differences in the cost of delivering services, including between rural and urban areas, through Area Cost Adjustments covering labour costs, rental costs and longer journey times. It also confirmed that a remoteness adjustment will be applied to adult social care funding, but not more widely across other service formulas.

The response acknowledged that limited additional evidence was submitted during the consultation to demonstrate the cost impacts of remoteness outside adult social care, but said the Government recognised the particular pressures rural authorities face in delivering adult social care services.

While the response sets out the Government’s overall approach to Fair Funding Review 2.0, it does not directly address several of the specific concerns raised by the RSN, including why other services were not included in the remoteness adjustment and the immediate impact on named rural authorities, the existing council tax burden on rural residents, and calls for greater transparency and further evidence-gathering on the costs of remoteness beyond adult social care.

RSN will continue to engage with the Government as the Fair Funding Review 2.0 and the provisional Local Government Finance Settlement progress.

- Read the RSN’s letter here

- Read the full government response here