A study has revealed local councils in rural England receive 50 per cent less government grant per head of population compared to their urban counterparts, yet people in rural areas pay £100 more per year in council tax. The study, conducted the Rural Services Network (RNS), also showed rural residents receive fewer public services.

The network has called for the 'rural gap' identified in its study to be addressed now as part of government plans to shake up council grants and business rates. It warned that one of the options under consultation in government threatened to lock in that unfairness for a further 10 years. image expired

The government may allow councils in England to keep the business rates they collect rather than paying them in to the treasury. Rural areas, particularly in the North of England, have said that the localisation of business rates, which is under consideration, as opposed to collecting funds centrally and redistributing them to local councils, could leave them much worse off because they lack a large economic base.

The report shows urban authorities receive £487 per head on average compared with £324 per year in predominately rural areas. The report also revealed council Tax per head is 21 per cent higher for rural authorities - £572 - compared to urban ones, at £473.

Perhaps more worryingly, government revenue grants and NHS funding for social care is £1216 for Predominantly Urban authorities but £927 for Predominantly Rural authorities. RNS chairman Roger Begy described allowances for additional costs associated with service provision across rural areas as "woefully inadequate."

He explained the implications of the "rural penalty" identified by the network’s research, "This rural penalty means council tax payers in the countryside are forced to pay more but receive less by way of public services in areas where earnings levels are much lower than the national average.

"When combined with the additional costs of providing services in rural areas this puts residents in rural communities at a significant disadvantage when compared to people that live in urban areas."

Local Government Resources Review could tackle imbalance

Ministers launched a Local Government Resources Review in March 2011, looking at how local authorities are funded. The network called for action to be taken to reduce the rural penalty, saying this provided an opportunity to recognise the extra cost of providing services in rural areas and end the disparity.

Though the Conservative Party laid out a "Rural Action Plan," which was published ahead of the last General Election, Mr Begy said there was a dramatic need to address the imbalance identified by the RSN, which has gone unacknowledged.

He said, "If the UK is to be led from recession via a more balanced economy... we must end the bias against rural areas. If vast swathes of the country are handicapped by higher costs and poorer access to basic services then this vision will not become a reality."

Tory Graham Stuart MP, who chairs the All-Party Parliamentary Group on Rural Services, described the findings as "extremely disappointing," he said, "Rural communities are at the losing end of an inequitable system that sees residents pay more, yet receive less; Fire services in predominantly rural authorities receive less funding yet attended significantly more primary fires."

However, a Department of Communities spokesperson described the proposals as "fair," saying that under the Conservatives' plans "Councils will gain unprecedented freedoms over how to prioritise their money."