06 August 2004
Rural residents get a raw deal from the present local government funding system, an alliance of local authorities has complained.
The Sparsity Partnership for Authorities delivering Rural Services (Sparse), a coalition of 45 rural councils, said that council tax payers living in the country are effectively subsidising their city-dwelling counterparts, who receive more funding for their services for a lower tax rate.
Sparse has submitted its report on the service gap between urban and rural councils to Sir Michael Lyons' inquiry into the council tax system and is urging ministers to take note of the findings.
The report, produced for Sparse by independent local government finance expert Rita Hale, found that Band D council tax levels are between 2%–3% higher in most rural areas than they are across the rest of England.
However, rural per capita spending is lower, at just 90% of the English average.
Sparse co-chair Steven Pugsley said countryside authorities were facing 'plain fiscal unfairness'.
'The way in which government grant is distributed enables councils in more urban parts to achieve the apparently impossible, namely to spend more than those in rural areas but to charge less in council tax.
'We are urging Sir Michael Lyons and ministers to end this urban bias in the council tax system. The whole of the government's rural strategy is severely undermined by the way in which country dwellers have to pay more to get fewer services.'
The report acknowledges that the scale of deprivation is often greater in urban areas but adds that rural deprivation is more difficult to identify and is not reflected fully in the distribution of the revenue support grant.
Pugsley called on the government to reform the system. 'Any changes to the council tax system, for example the introduction of new bands, should not be allowed to worsen the already ill-favoured position of rural areas,' he said.
However, a spokeswoman from the Office of the Deputy Prime Minister dismissed Sparse's claim of deprivation. She said: 'The grant distribution formula is specifically designed to distribute grant according to relative circumstances, or relative need, both in rural and urban areas.'
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