Families living in rural regions are set to experience annual increases in council tax “for the foreseeable future” underLabourTheir attempt to redirect funds from rural areas to urban centers has been cautioned by council leaders.
The biggest councils in England have sounded the alarm after new research indicates they will get only 2p in government funding for every £1 of their expenses over the next three years.
In the meantime, urban borough councils are expected to be more than 20 times wealthier, receiving 42p for every £1 in expenses, as per the analysis by the County Councils Network (CCN).
Under the Labour Party’s ‘Fair Funding Review’ and a three-year financial agreement for local authorities, which was revealed last month, millions of pounds will be shifted from rural regions to large cities in the north and the Midlands.
The agreement will be voted on in the House of Commons next month, and council leaders have criticized the Government for ‘selectively choosing’ which areas to focus on beforehand.
The study indicates that county and major rural unitary councils will have an additional £7 billion to spend annually by 2028/29, while new government funding is expected to amount to only £133 million over the next three years.
This will result in an £11 billion funding shortfall, forcing them to reduce expenditure on essential services and leaving them with ‘no alternative but to continue increasing council tax’.
The CCN has cautioned that, despite reductions, numerous local authorities might still struggle to maintain financial balance and may need to seek out specific ‘rescue’ loans to sustain daily operations and prevent actual insolvency.
Last year, a record number of 30 councils received special financial assistance (EFS), which cost taxpayers £1.5 billion, and only three out of ten councils are now certain they won’t need to seek this support to cover their expenses by the end of this parliamentary term.
Steven Broadbent, the finance representative of the CCN, stated: “The financial prospects for county and unitary councils appear to be growing more difficult over the next three years, as the Government selectively chooses regions to allocate funds to, and redirects essential resources toward city areas.”
Rather, the responsibility is being strongly imposed on county and unitary councils and local taxpayers, resulting in residents experiencing annual increases in council tax for the foreseeable future.
The CCN had earlier cautioned that Labour’s plans would negatively impact rural regions, but it now claims that officials have further modified the reforms to channel more funds toward city areas.
Last-minute modifications to Labour’s plans involved reducing the ‘remoteness’ element in the updated formula, which previously considered the increased expenses of providing services in remote regions. This adjustment had been applied to all services but will now be limited to adult social care.
The Government has also set aside a £600million ‘recovery grant’ for the upcoming three years, primarily aiding city councils. The CCN noted that, overall, these adjustments are expected to transfer an additional £500million from county councils to urban regions.
The CCN, which represents 39 councils and 27 million residents, is urging Labour to undo these ‘unfair’ modifications, claiming they are ‘not supported by evidence’.
Mr. Broadbent noted that numerous council leaders are now doubting ‘how fair’ the Fair Funding Review truly is,’ as it will compel them to ‘reduce daily services that millions depend on, such as buses, libraries, and social care.’
A representative from the Ministry of Housing, Communities and Local Government stated: “This analysis is completely inaccurate. We are allocating an additional £11 billion for councils – over £1 billion of which is designated for areas that are mainly rural.”
This will resolve the flawed financial system we received, ensuring individuals receive the top-notch public services they are entitled to. Local councils are in charge of determining council tax rates, and we anticipate they will prioritize the needs of taxpayers.
