‘Rural bonus’ idea to boost funding

Environment Minister Richard Benyon said a shake-up of the way Whitehall funded local councils could see a rural premium added for some authorities to “properly reflect” the extra costs of running public services in remote areas.

Rural MPs in Yorkshire and across England have long complained people living in the countryside struggle with low wages and higher council tax, yet receive less Whitehall money for their roads, schools and hospitals.

Campaigners at the Rural Services Network estimate that councils in urban areas receive £163 per head more than their rural counterparts, despite most public services costing more to deliver due to the large distances involved.

In January, a delegation of MPs led by Beverley and Holderness Tory MP Graham Stuart, who chairs the all-party parliamentary group on rural services, pressed David Cameron to reform a system which has left rural constituencies underfunded for so long.

Now the Department for Environment, Food and Rural Affairs (Defra) says it is working “across Whitehall” to assess whether funding allocations for rural councils need to be improved.

Mr Benyon said in a written Parliamentary response: “The Government is committed to ensuring that all areas are treated fairly in the allocation of central Government grants.”

He went on: “Defra works closely with departments across Whitehall to help them understand rural needs and opportunities, and to encourage them to ensure their policies and funding schemes benefit both rural and urban communities.

“As part of their work on business rates retention, the Government is looking at the cost of delivering services in rural areas and whether this is properly reflected in the current system of funding.

“The Government will consult on any changes considered appropriate as part of the wider consultation on the final shape of the business rates retention scheme later this summer.”

The coalition has previously announced plans to shake up the business rates system, allowing individual councils to keep more of the proceeds from their area to offer an incentive for them to encourage economic growth.

No detailed policy has yet been laid out, but fears have been raised the proposals could see the prosperity gaps between North and South and rural and urban areas widen, with growth concentrated in cities and in the South East.

But it appears the proposed “rural premium” could be part of this new funding mechanism, in an effort to redress the balance.

Beverley MP Mr Stuart said he was delighted with the Minister’s response. “We will aim to work with him in the future to carry this forward, because until we see a fundamental change in things like health funding and local authority grant levels, rural areas will continue to fall behind.”

The Coalition has looked to paint itself as a champion of the countryside, contrasting itself with the previous Labour Government which outlawed hunting and allowed the closure of thousands of rural post offices and village pubs.

Defra said a consultation would get under way later this year.

“We will shortly publish a ‘rural statement’ which will include new initiatives from across Government to promote thriving rural communities and businesses,” a spokesman said.

“We are working across Whitehall to evaluate whether local authority funding allocations should be weighted differently to reflect the higher cost of delivering services in rural areas.”

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