Ministers Listen To Rural MPs’ Concerns On Local Government Funding

East Riding MPs Graham Stuart and Sir Greg Knight today welcomed the new proposals from the government on rural funding.

In a statement to the House of Commons last week, Greg Clark, Secretary of State for Communities and Local Government, set out new measures to support rural councils during the transition to full business rates retention.

The Rural Services Delivery Grant will increase from £15.5 million this year to £80.5 million next year. Ministers will also provide a £150 million a year transitional fund for the biggest losers over the next two years, of which £32.7 million will go to rural areas.

In the meantime, the Government will carry out a Fair Funding Review, which will inform the move to 100% business rates retention scheme. The new assessment will be an opportunity to highlight the particular needs of rural areas.

Under the new proposals, the East Riding of Yorkshire will receive additional funding from central government of £2.15 million in 2016/17 and an extra £1.45 million in 2017/18 compared with the provisional settlement.

According to research by the Rural Services Network, residents in rural areas currently pay £81 more in council tax than their urban counterparts, earn less, and yet see urban residents receive 45% more in central government funding for their council services. This is despite the fact that services in rural areas are more expensive to deliver because of an older, sparser population.

The Government’s provisional settlement, set out in December, would have reduced the overall amount of central government funding for rural councils by over 31% over the four year period, whereas urban councils would only have received a 22% average cut.

Graham Stuart, Member of Parliament for Beverley and Holderness and chair of the Rural Fair Share Campaign, said: “The Government’s proposals which came out before Christmas were unacceptable. I’ve led the Rural Fair Share Campaign for years now to get the Government to close the urban-rural funding gap.

In the last Parliament, ministers accepted our arguments and gradually began to reduce the deficit. The provisional settlement would have not only failed to narrow the gap any further, but would have actually taken us backwards and redistributed more money to urban councils.

“I cautiously welcome the Government’s new proposals, and the clear recognition of the challenges of delivering services in rural areas. We will be making submissions to the funding review to ensure that the needs of an older, poorer and sparser population in rural areas are properly taken into account. This is only a small step on the journey to fairer funding, but I am pleased that ministers have listened to our concerns.

“I am very grateful to Sir Greg for his consistent support for the Rural Fair Share Campaign. Together, rural MPs from across England were able to make representations to ministers. We have not been asking for any special favours for rural areas. This is about basic fairness. Our rural constituents have the right to expect to be taxed fairly and to receive a fair amount of support for their local services.”

The Rt Hon Sir Greg Knight, Member of Parliament for East Yorkshire and Patron of the Rural Fair Share Campaign, said:

“I am pleased that the Government has decided to change its proposals so that the funding gap between urban and rural areas will not widen any further. I pay tribute to Graham’s effective campaigning on this issue, and have been glad to support him.”

“I hope that the Government listens very carefully to the rural voice as it carries out the long-overdue needs assessment. It cannot be right that rural areas effectively subsidise higher government funding for urban councils through higher council tax rates. I’ll be watching very closely to see if the Government makes progress on this issue.”

During his statement to the House of Commons on Monday, the Communities Secretary Greg Clark said:

“I pay tribute to Graham Stuart for conducting a well-reasoned and forensic argument that has been persuasive, and I am grateful for the manner in which he has done that. He is right. It is a false assumption that because an area is rural, it is wealthy and prosperous.”

“Some of the most challenging circumstances are in the most rural areas. That is why, after more than a decade, it is long overdue that we should look at the costs of delivering services in rural areas. We should look at the pressures that they face and set the retention of business rates accordingly, so that they can be recognised in a way that they have not been over recent years.”