Debate: Government support for rural upper-tier local authorities

A debate will take place in Westminster Hall on 2 September at 2.30pm on ‘Government support for rural upper-tier local authorities’. The debate will be led by Helen Morgan (Lib Dem, North Shropshire).

In England, ‘rural upper-tier local authorities’ are either county councils or unitary authorities. Local government is devolved in Scotland, Wales and Northern Ireland and therefore does not receive direct financial or other support from the UK Government.

Some rural county councils are affected by the Government’s programme of local government reorganisation, which is due to be implemented as of 1 April 2028 (see the Library webpage Proposed unitary authorities 2026: Maps).

Government support for rural authorities

The Government’s 2026-29 local government finance settlement does not include any explicit support for rural upper-tier authorities. The adult social care part of the formula included a ‘sparsity adjustment’, intended to take account of travel times of care providers. The formula for special educational needs also takes into account EHCP recipients’ travel times to specialist school provision.

The new formulas mean that some local authorities (particularly those in cities with high levels of deprivation) will have higher spending power than in previous years, while others (particularly rural shire districts and authorities with very low council tax rates) will have less to spend. The largest increases in core spending power in the 2026-29 settlement went to predominantly urban authorities (although many of these will also have real terms decreases). Predominantly rural authorities are more likely than not to experience decreases in core spending power.

A number of councils expressed the view that rural authorities had fared less well in the 2026-29 settlement:

Suffolk CC deputy leader Richard Smith (Con) said the county now faced a £6m budget gap, £3.5m worse than it was forecasting before the draft settlement.

“The government has shifted resources towards metropolitan areas at the expense of rural counties like ours, while injecting very little new money into the system,” he said.

Westmorland & Furness Council cabinet member Andrew Jarvis (Lib Dem) said the settlement confirmed “a substantial reduction in government grant” and warned that rural authorities were being disadvantaged under the new formulae.

“Funding is in effect being diverted away from rural areas over the next three years, and the assumptions being made are not realistic for an area with our characteristics.”

Wiltshire Council leader Ian Thorn (Lib Dem) also called for the government to consider “rural authorities like ours face unique and complex challenges compared to urban and metropolitan areas”

[Caitlin Webb, Draft settlement tests limits of fair funding reform, Local Government Chronicle, 8 Jan 2026]

Former Rural Services Delivery Grant

A Rural Services Delivery Grant formed part of the local government finance settlement between 2015 and 2025. This provided additional funding to authorities in the upper quartile of the Office for National Statistics’ super-sparsity index. £16 million was distributed in 2015/16, rising to £80-85 million in subsequent years.

Allocations to the recipient councils in the RSDG’s final year (2024/25) can be seen at Rural Services Delivery Grant Determination 2024 to 2025. This funding was not ring-fenced and could be spent as the councils wished.

The absence of the RSDG from the 2026-29 local government finance settlement was raised several times in the debate on the provisional allocations on 17 December 2025. For instance:

Simon Hoare: …. the cost of delivering services in rural areas is higher—everyone across the House recognises that—so can she say what this proposed settlement will do specifically to address that and allow equity of opportunity in access to services, whether one is an urban or rural resident?

Alison McGovern: The hon. Gentleman is absolutely right to highlight how we have to do things differently in rural areas, and we have tried to take account of that need. That is why we are including a journey times adjustment in our assessment of cost for all services. We are also increasing the cap in the home-to-school transport formula from 20 miles to 50 miles, in recognition of the fact that the original distance cap would penalise local authorities that have no choice but to place children further from home. We are also including a remoteness adjustment in the adult social care formula to address the point that he mentions...

[HC Deb 17 Dec 2025, c969-70; see also HC Deb 11 Feb 2026]

The Government also made available a Rural England Prosperity Fund between 2023 and 2026. This formed part of the UK Shared Prosperity Fund, which was discontinued from 1 April 2026.