The way Whitehall grants are distributed across England sees predominantly urban local authorities receive 47 per cent more than those in rural areas, meaning public services face ruin in the countryside, the Rural Services Network (RSN) warned.
Seventeen per cent of rural households are living below the breadline, with residents in urban areas each benefiting by £178 more in public spending.
The disparity compounds the substantial hardships facing rural residents who have seen public services in their areas reach a crucial “tipping point”, according to the RSN.
People living in rural areas pay higher council tax bills than urban residents to counteract some of the funding gap. In 2014/15 the average council tax bill per head in rural authorities is £427 compared to £348 in urban areas.
But these higher rates are not enough for rural authorities to bridge the funding gap left by lower government grant, and are still left with £99 per head less to spend on local authority services compared to urban councils.
Graham Biggs, the RSN’s chief executive, said: “Even before the era of austerity rural services were at a low level compared to urban areas. Historically, urban areas have received more government grant, no matter which party was in government.
“It therefore follows that when the era of austerity starts to bite, the bite will be stronger and deeper in rural areas, and we are feeling the bite now.”
He admitted the recently improved £15.5m Rural Services Delivery Grant was a positive step but that sum was just a tiny fraction of the £260m mooted in 2012.
Mr Biggs added: “I don’t think there is anyone in local government or a commentator close to national government who would say that the formula is anything other than bust.”
Leah Swain, chief officer at Rural Action Yorkshire, said fairer public spending was a must.
“I would back calls for at least parity of funding to local authorities in rural areas,” Mrs Swain said. “Rural residents pay the same taxes and yet are faced with increasing cuts to libraries, bus services, care support and other services. We are expecting further local authority cuts over the coming three years and soon it will be too late to save services under threat.
“An urgent review by the Government is required. It costs more to deliver many services in rural areas, for example installing the infrastructure for superfast broadband or providing transport for people without cars to reach medical appointments when only 55 per cent of rural households live within 8km of a hospital.”