Council’s push for a fairer funding deal for rural communities starts to bear fruit

Shropshire could be getting a fairer funding deal from the Government after ministers pledged to review how much money councils receive to provide rural services.

The vow to review the funding formula for rural services is contained in the Government’s response to a consultation on proposals enabling councils to keep a share of business rates they collect rather than paying them to Whitehall.

Shropshire Council is delighted with the news, which is being seen as a boost for rural councils which have long campaigned for a fairer funding deal from central government.

The response, published just before Christmas, says the Government will consider limited technical adjustments to the funding levels for rural services and concessionary travel.

Councils would be freed to generate greater levels of income, encouraged to support local firms and jobs and be well placed to reap the rewards of success, according to the communities and local government secretary, Eric Pickles.

Last year, some £19 billion in business rates collected by councils was recovered by government and redistributed back out through a complex grant.  Ministers believe the new system will be more transparent and increase the amount of revenue councils generate from business rates.

To establish the new funding levels, existing datasets will be updated and limited technical adjustments considered, which will affect how much funding councils are given – with a greater emphasis given to how much it costs to provide services in a rural area.

But there are no plans to change the way that business rates bills are calculated, the way that properties are valued or the way business rates levels are set.

Councillor Cecilia Motley, Shropshire Council’s Cabinet member for rural services and Vice Chair of the Rural Services Network, said:

“This is really good news and is testament to our hard work lobbying the Government to make changes to the funding formula.  Although it’s still early days, I hope this will go some way to address the imbalance between council grant funding in rural areas and urban areas, resulting in a fairer deal for Shropshire.  This will help the council and its partners to ensure that people in rural communities are not disadvantaged because of where they live.

“The Rural Services Network recently commissioned an in-depth study into the costs of providing local government services in rural areas.  That study clearly proves that like-for-like services are more expensive to provide in rural authorities than urban ones.  We know this was given to the Government and feel it has been influential in the recent announcement to review the costs in rural areas.”