Taken for a rural ride? by Steven Pugsley

4 Aug 05
The Office of the Deputy Prime Minister's review of the local government grant formula must take greater account of the extra cost of providing essential public services to far-flung rural communities

05 August 2005

The Office of the Deputy Prime Minister's review of the local government grant formula must take greater account of the extra cost of providing essential public services to far-flung rural communities

As many of our population flee our towns and cities for the more salubrious corners of the countryside, the time seems right to ask again what is being done to improve the quality of life for the majority of rural residents who depend on good public services to get by.

Central to this question is the way the local government grant is distributed among individual councils - a key determinant of what's available to spend on services and council tax levels.

The Office of the Deputy Prime Minister made an overt commitment to introducing greater stability into the grant system with its Three-year revenue and capital settlements consultation paper last December, a move widely welcomed by many observers.

Planning services over a three-year cycle must make sense, and will be welcomed by many of those charged with providing public services, who until now have been forced to wait until the dying weeks of the financial year before knowing what's in store for the year ahead. 

However, the concern of the more than 50 sparsely populated rural authorities that I represent is that such stability should not embed the existing unfairness in the current arrangements towards rural areas.

I continue to harbour a nagging concern at the systematic failure of successive governments to commission proper research into the impact of settlement patterns and population dispersal on the cost of providing public services.

Many authorities are now digesting the implications of the 300 or so pages of options for changes in the ODPM consultation paper Formula grant distribution, which was published last month.

The paper says: 'The aim of this review is to produce a robust and fair system for the distribution of formula grant that will be fit for use in the context of three-year settlements.'

But it admits: 'The government recognises that any system based on formulae cannot reflect all possible circumstances, so there will inevitably be an element of rough justice: and that the technical nature of the issues means that there is frequently no clear-cut optimum solution, so pragmatic decisions will be needed to produce a workable system.'

And, while there is some positive news in that consultation - for example the realisation that owning two or more cars in the countryside might be a necessity not a luxury - there is still a glaring absence of a universally applied sparsity factor to reflect the extra cost of providing services to far-flung communities. 

This will, in fact, create a form of 'rough justice' for an entire class of rural local authority - in particular smaller districts, where an extra £16,000 spend means £1 on council tax bills. There is little room for manoeuvre, and critical public services are exposed by a potentially hair-trigger grant mechanism.

What is needed is that old chestnut - 'joined-up government'. It sounds like a hollow cliché after all these years, but if only the ODPM took closer heed of the policy goals of its sister departments, instead of being an urban-ruled empire, then rural areas would see some progress.

The Department for Environment, Food and Rural Affairs says it wants to target the most deprived areas of the countryside. It has conducted extensive research to pin-point accurately where rural social exclusion resides.

We welcome this: good data is the first step towards good policy. But its value comes only in its application.

Academic research shows a direct correlation between sparsity and rural deprivation. Indeed, this was expressly flagged up in the Commission for Rural Communities' recently published State of the countryside 2005 report.

The link seems so obvious: remote settlements face difficulty in accessing public services, which are, in turn more expensive to provide. In addition, low wages in the countryside mean that the marginal impact of council tax bills on household incomes can equate to an extra two or three percentage points in income tax.

Indeed, imagine if income tax were increased by that amount in rural areas to cover the extra cost of providing services funded by central government, say, health. A rural revolt would surely ensue.

But that is precisely what we are talking about in the case of local services - hence the injustice about which my members, and the 5.5 million people they represent, are so vexed.

It is time for some joined-up policy on support for rural communities.

Steven Pugsley is chair of Sparse (Sparsity Partnership for Authorities Delivering Rural Services)