Herefordshire Council stands firmly alongside the Rural Services Network (RSN) in challenging the recent provisional local government finance settlement, which significantly disadvantages rural communities like ours. The settlement unfairly favours urban areas, neglecting the unique needs and higher operational costs of rural local authorities. Supported by detailed analysis from the RSN, we identify a critical funding disparity where Government Funded Spending Power in urban areas is 41 % higher than it is in predominantly rural areas.
Key Insights from RSN and Herefordshire Council’s analysis:
- The complete removal of the Rural Services Delivery Grant, previously essential for sustaining rural services, has significantly impacted our funding. This funding was worth £7 million to Herefordshire Council in 2024/25.
This grant has been repurposed into the new Recovery Grant. - The new £600m Recovery Grant heavily favours urban locales who receive over 7 times more of this grant than predominantly rural areas.
- On average, residents living in predominantly rural areas will pay 20% more in council tax than residents living in predominantly urban areas.
- The amount of money Herefordshire Council has to spend per head of population that is government funded will reduce by 3.14% in 2025/26, compared to an average increase of 8.21% in predominantly urban areas.
- The proportion of funding money Herefordshire Council has to spend per head of population that is government funded in 2025/26 is 36%, compared to an average of 44% across all upper tier councils.
Councillor Peter Stoddart, Herefordshire Council Cabinet Member Finance and Corporate Services, said:
“We have been clear in our response to the government’s provisional settlement, and throughout the current budget setting process for 2025/26, that the changes to government funding, and the current allocation distribution, unfairly favours urban over rural areas.
“As a result, we have had to take the extremely difficult decision to increase council tax for our residents by more than we had originally planned, to fill the funding gap to ensure we can continue to provide vital services to our local communities.
“We urge the government to reconsider its approach to the funding distribution and to engage with all rural local authorities to understand the profound impact of these decisions.”
Cllr Roger Phillips, Chair of the Rural Services Network, added:
“The RSN’s commitment to rightful service provision remains unwavering, yet this settlement undermines the ability of rural local authorities to meet the needs of their residents. The data speaks volumes about the disparities that risk widening the urban-rural divide further—something we are determined to avoid. Rural areas are not asking for more than their fair share; they are demanding a fair chance to serve their communities adequately. It is crucial that the government recognises the inequity embedded in this settlement and rectifies the funding model to support all constituents equally. We seek fairness, not favouritism.”
Kerry Booth, Chief Executive, Rural Services Network, said:
“As Chief Executive of the Rural Services Network, I am deeply concerned about the implications of the recent government finance settlement on our rural communities. The persistent underfunding of rural areas not only challenges the sustainability of essential services but also neglects the fundamental principle of equity in public funding. Recent research commissioned by the Rural Coalition stresses the vast economic potential of rural England, which could contribute an additional £9 to £19 billion annually in tax revenues. This clearly shows that rural areas are not just scenic backdrops but are vibrant economic hubs critical to our national prosperity.
It is imperative that the government reconsiders its approach and ensures that funding allocations genuinely reflect the needs and challenges of all areas, urban and rural alike. Rural communities are integral to our nation's growth strategy. Together, with a unified voice, we must advocate for a settlement that truly understands and addresses the unique circumstances of rural England, harnessing their full potential to enhance the quality of life and economic well-being across the country."