Roger Begy: Unfair tax system is penalising rural Britain

Yes, it is true we need to diversify the economy and ensure Britain is known to our trading partners for more than just banking and financial services, however we also need to end the bias towards cities over rural communities and the perception that countryside is simply a pretty landscape.

Many people have a chocolate box view of the countryside as a place where people spend their weekends to escape the hustle and bustle of city life. However, this is completely disjointed from reality. Many people live there because that is where they can find jobs. The rural economy is worth billions to UK Plc and its role in helping Britain’s economic recovery should not be underestimated.

People have the misunderstanding that social problems are simply confined to inner city areas. While I will not deny my preference is for rural living and its many advantages, there is an increasing danger that policy makers at Westminster and Whitehall see the countryside through rose-tinted spectacles. For example, one in four rural homes suffers from fuel poverty and the lower provision of transport services can lead to isolation, in particular for families with only one car.

This week we launched a report highlighting the disparity in funding allocated to rural councils in comparison to their urban counterparts. The report has some stark findings that should enrage those living in rural areas and shame the decision makers in charge.

It shows that on average urban authorities receive £487 per head compared with £324 in predominately rural areas. This is a startling 50 per cent more taxpayers’ money.

The question we need to be asking of government is why do they believe that those in the countryside need 50 per cent fewer resources to run the same quality of services given to those in the cities? If they fail, as they have done, to come up with a compelling economic case for this then we would contend this is a case of blatant discrimination.

This situation is something we see very clearly in Yorkshire. East Riding Council receives £304.28 worth of funding per head. By comparison, residents of Hackney in inner London receive £1,041.39 worth of funding per head.

We are not denying that Hackney has significant social problems, however it is inconceivable that it can cost more than three times as much to provide the same services in an inner London Borough than in the East Riding.

In fact in many cases the opposite is true – it is cheaper to provide services in Hackney. Refuge and recycling collection for example is considerably cheaper as there is less travel time involved in each collection round.

Fire services in predominantly rural authorities attended significantly more primary fires than in urban areas. Primary fires are generally more serious and therefore more costly to put out. In addition predominantly rural authorities have on average 35 per cent higher transportation costs as they have more ground to cover.

There are some allowances in the formula to compensate for these additional costs of service provision in rural communities. However, they are woefully inadequate compared to those actual costs, thereby creating a “rural penalty” for rural councils and the communities they serve.

Is it then the case that residents in the countryside pay less tax? Quite simply not. Council Tax per head is 21 per cent higher for predominantly rural authorities, compared to predominantly urban authorities. In East Riding the average council tax per head is £440.34. In Hackney it is £339.97.

So those of us who live in the countryside are paying higher council tax to compensate for the inbuilt bias in the way that funding is allocated by central government. As a result we often receive a lower quality of service.

The Department for Communities and Local Government is currently reviewing the mechanisms with which funding is allocated as part of the local Government Resources Review.

As part of this review the issue of business rate localisation is being examined. There is a danger that these inequalities will be locked in place for a period of ten years.

This is why the Rural Services Network has embarked on a campaign to ask the DCLG to use the Local Government Resources Review to reverse this inequality. As part of this we have been working very closely with Yorkshire MP, Graham Stuart.

The current government, and by that I mean both parties, came to power by promising a fair deal for all in the UK. That is simply what we are campaigning for – a fair deal for rural communities and those who live there.

Councillor Roger Begy OBE is chairman of the Rural Services Network.