Rural Councils Must Not Lose Out In Funding Reform

Following reports in The Times that proposed changes to council funding allocations have been watered down after lobbying from London boroughs, the Rural Services Network (RSN) is urging government to ensure that rural areas are not left behind once again.

Rural councils already face higher costs in delivering essential services due to distance, sparse populations, ageing demographics and limited economies of scale — yet continue to receive less per head in central government grant than their urban counterparts.

Analysis by the RSN shows that for 2025-2026 urban areas are receiving around 40% more in Government Funded Spending Power per head, while years of underfunding has meant that council tax has increased in rural areas to help balance the budget.  Rural residents are this year paying on average 20% more in Council Tax. Despite this, rural councils must still deliver vital services across wider areas, with smaller workforces and higher travel, fuel and maintenance costs.

Services such as adult social care, home-to-school transport, waste collection and emergency response are all more expensive to deliver across dispersed rural geographies. For councils serving large rural areas, workforce travel time and fuel costs are unavoidable factors, with care staff often driving long distances between clients and vehicle-based services operating across many miles. 

However, it’s not just about the travel time though, as lack of competitive markets in rural areas means that councils are having to pay a rural premium for services such as home care services in more remote communities. 

In education, rural authorities face far higher per-pupil costs for home-to-school and SEND transport than urban councils, due to longer routes, limited public transport options and the need for specialist provision across large areas.

The government’s review initially included a ‘remoteness factor’ to reflect these additional costs. If this element is now to be downgraded, there is a real risk that rural communities will be further disadvantaged.

Kerry Booth, Chief Executive, Rural Services Network: We fully support a funding system based on up-to-date evidence of need, but that must include recognition of the genuine and unavoidable costs of delivering services in rural areas. Too often, the measures used to assess need fail to capture the hidden deprivation and higher delivery costs faced by rural councils. Everyone, no matter where they live, deserves access to well-funded local services. Fair funding means fair outcomes for all communities. The RSN will continue to make the case for a balanced settlement that properly reflects the realities of rural service delivery as government prepares to publish the final funding review.