Kerry Booth, Chief Executive of Rural Services Network

The Rural Services Network this year celebrates its 30 year anniversary since it was first formed as a group of local authorities coming together to look at the disparity in funding for rural councils.

Whilst the Network has grown significantly and has a substantial reputation for being the national champion for rural service providers working to represent them on the national stage, the very reason the group was originally formed, now looms louder than ever.

The Final Local Government Finance Settlement published on 10^th February sets out how much funding local councils will receive for 2026/2027 along with indicative figures for the following two years.

Whilst there is understandable concern that for 2026/2027 urban councils will receive 32% more per head of Government Funded Spending Power than rural, it is the ongoing trend which creates the most alarm for rural councils.

When mapped over a five year period, the Government Funded Spending Power for the most urban councils, increases by 20%, compared to the most rural where it essentially flatlines at 2%.

It is expected that rural councils will make up the gap in funding through council tax, but by 2029 the gap in Government Funded Spending Power between the rural and urban councils will be 42%!

And remember, wages earnt in the rural economy are lower than the national average, so from those lower wages, rural residents will be paying more in their council tax to try to help councils balance the books.

We welcomed a new funding formula, the old one was out of date and needed a refresh, yet we were hoping for a fair and transparent formula with the refresh.  Unfortunately, the new formula still has to fully take account of the additional costs for rural councils in delivering services apart from in relation to adult social care, and yet they face those costs across the board in service delivery.  We’d love to see the evidence for this decision from Government.

Despite claiming to use the most up to date evidence, the settlement uses both IMD 2025 and IMD 2019. By including the Recovery Grant which was supposed to be a one-off grant and is allocated using IMD2019, the Government is using old out of data evidence as part of the process to direct millions in funding to particular areas of their choosing.

There has been no evidence published by the government to demonstrate that deprivation is the key factor for distributing funding to local government. Indeed, the research undertaken by MHCLG in 2018 suggested that deprivation “was not a major cost driver for the services included in the Foundation Formula”. (The Foundation Formula assesses the relative need for services provided by local authorities that are not captured by more service-specific Relative Need Formulae (RNFs)

The same research found that population was overwhelmingly the most important factor, driving 88% of the variation of upper-tier costs in the Foundation Formula, and 84% of the lower-tier costs. MHCLG has not published any evidence that would lead it to change its conclusions about the relative importance of deprivation for distributing general funding to local government. We believe at the RSN that other factors, such as the ageing population are the ones that place additional demands on services and costs.

The Rural Services Network responded to the consultation and has further written to the Minister Alison McGovern, asking for more information and evidence on the underlying decision making, to help rural councils understand the data and decisions that have been taken. They need transparency behind the decision making, which should be subject to clear evidence and reasoning especially when it produces such a devastating impact on them.

This new formula has been approved by the Government in Parliament and it makes the role and ethos behind the Rural Services Network more important than ever as it reaches its 30^th year of campaigning. We are entering a phase of reorganisation and reshuffling of boundaries that will predominantly hit our rural areas, with larger unitary authorities replacing smaller district councils and county authorities. 

Wherever those new boundaries may lie, and from wherever our public services will be governed, rural communities will still exist, it will still be more expensive to service those sparsely populated areas, and the Rural Services Network stands ready to champion their needs at the highest level.