Viewpoint: We need a fairer deal for rural councils

Clive Wright, Chief Executive of Shropshire Council, continues to campaign with fellow rural councils, to get a fair deal from the government.

It has been widely evidenced that rural communities get a raw deal on funding from Government. The Rural Services Network and County Councils Network have done a great job on making that clear. Outdated assumptions that poverty and need only exist in an urban context have been challenged, and it is clear that the index of multiple deprivation which drives the funding formula for councils is ‘broken’. Using the Office of National Statistics data, it is clear that the number of pensioners in poverty is about the same in rural areas as it is in urban areas, which begs the question of why care for older people is better funded in urban areas.

Shropshire is a wonderful and aspirational place to live, work and retire in. We are a very sparsely-populated county based on agriculture, with 30 per cent more older people than the England average. These factors conflate to mean that, despite low cost per person and fantastic quality of care, our costs of caring for older people increase by £8m per year.   

The council, like most of our colleague councils, have made huge efficiencies and have saved £114m since 2012. We are changing the way we work, growing and diversifying our economy and becoming more commercial, but we know that we will have a funding gap of £37m per year in 2019/20.

Ironically we also receive less government funding in Shropshire compared to the average council. If we were funded to the average of all English councils, we’d have at least £25m more cash to spend in Shropshire every year, and this is why we have been fighting for fair funding for some time.

All of our 155 services compare well on both cost and quality, but unless the method of calculating council funding is changed to be fairer, then we cannot sustain them.

In the future councils will be less reliant on government funding. Instead their funding will depend on local business rates, council tax and other income. With almost twice the national average of small businesses in Shropshire, a fact which we are very proud of, this gives us a challenge – as these businesses do not generate business rates for the council. Neither do our predominant agricultural businesses pay business rates, despite the huge infrastructure demand they create including roads, broadband, drainage and bridges.

Councils everywhere are under pressure, but some are getting a much better deal from the government than others. That’s why a fair funding formula is needed to level the playing field.

As a result of our campaigning our Head of Finance is working as part of a national committee on fair funding of councils, and the outcome of this work should be implemented in the year 2020 – we hope with positive impact for Shropshire. Until then, we will keep arguing our case and we will keep battling away at the highest levels of government.

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    1. I can’t see that the IMD is “broken”. I find this one of the most useful and accurate indicators we have, especially when used at LSOA level.

      The problem that rural areas like Shropshire face is that funding formulas tend to overlook small geographical areas of deprivation. Funding based on deprivation favours larger areas in inner cities and ageing suburban estates. Neither do funding mechanisms take sufficient account of rurality and sparsity. Ageing as noted, is well underfunded.