09 Jun 2026
Recent debate around local government finance reforms has raised an important question: if councils’ spending power is increasing, why are many rural authorities still concerned about the impact of the changes?
Part of the answer lies in understanding what Core Spending Power (CSP) actually measures.
Core Spending Power is often used as a headline indicator of the resources available to councils. However, it is not the same as Government funded spending power. It combines several sources of income, including council tax, retained business rates and Government grants.
This distinction matters.
It is also important to compare like with like, when we talk about levels of Government Funded Spending Power being lower in rural areas, we often hear responses around core spending power levels but this is not the same measure.
A council can see its Core Spending Power increase even if Government funding remains unchanged or falls, provided that growth in council tax income or other locally raised revenues makes up the difference. As a result, similar levels of spending power growth do not necessarily mean that councils are receiving the same level of support from central Government.
For many rural councils, the issue is not simply the overall level of spending power available, but how that spending power is funded. Rural authorities often face higher costs in delivering services across large and sparsely populated areas, while residents frequently contribute more through council tax than their urban counterparts. For 26-27, council tax in rural areas is 17% higher per head than in urban areas. The burden of paying for public services, falls on local residents, and whilst wages earnt in the rural economy are lower than the national average, this can put working families and individuals under increased cost of living pressure in rural communities.
The same essential services must still be provided by councils, but often across greater distances and with fewer economies of scale.
This is why the debate extends beyond headline funding figures. Questions remain about whether funding allocations adequately reflect the additional costs of serving rural communities, the assumptions made about local taxbase growth, and the balance between Government support and local taxation.
At its heart, this is a debate about fairness.
The Rural Services Network does not argue that rural areas should receive preferential treatment. Rather, we believe that public funding should properly reflect the realities of delivering services in rural communities and ensure that residents are not disadvantaged simply because of where they live.
RSN’s case is clear: where it costs more to deliver services, funding should reflect those costs. Rural residents should not pay more and receive less simply because of where they live. Find out more about Rural Fair Funding here.
