The County Councils Network (CCN) warns that four in five rural councils are now in a worse financial position than before the provisional Local Government Finance Settlement. With a disproportionate share of funding directed towards urban areas, county councils face severe service cuts and inevitable council tax hikes. CCN urges the government to rethink its approach before rural communities bear the brunt of these decisions.
Councils Sound Alarm Over Deteriorating Finances
Ahead of the final Local Government Finance Settlement, the County Councils Network (CCN) has issued a stark warning: four in five of its member councils are now in a worse financial position than before the provisional settlement. A recent survey reveals that county and rural unitary councils are increasingly likely to cut vital services as they grapple with widening funding gaps.
The findings come from CCN’s finance and budget survey, conducted in January and published alongside its response to the provisional Local Government Finance Settlement. The message is clear: the funding allocations proposed by the government are exacerbating financial pressures, forcing rural councils to make difficult decisions about services and tax increases.
Disproportionate Funding Allocation Hitting Rural Areas Hard
CCN argues that its members are facing deeper financial hardship due to the government’s selective allocation of additional funding. The new £600 million Recovery Grant is heavily skewed towards urban and city councils in the North and Midlands, leaving rural areas with a mere 3% share. At the same time, the removal of the £100 million Rural Services Delivery Grant for 2025/26 has further intensified the financial strain on county councils.
Despite these challenges, county councils must still bridge growing budget shortfalls, with several already seeking exceptional financial support from the government. The unfair distribution of funding is making it increasingly difficult for rural councils to maintain essential services.
Council Tax Hikes and Service Cuts Now Inevitable
As a result of these funding decisions, county and unitary councils are left with few options:
- Near-universal council tax increases: 93% of CCN members say they will raise council tax by the maximum permitted 4.99% in 2025/26, yet this will not be enough to fill the funding gap.
- Severe service reductions: 31% of councils anticipate making severe cuts, with 61% warning of staff redundancies.
- Impact on social care and transport: More than half (51%) of councils are more likely to reduce adult social care services, and 50% expect to cut eligibility for school transport.
- Cuts to environmental and public safety initiatives: 42% of councils say they are more likely to switch off more streetlights, while 45% predict a reduction in climate change programmes.
A Worrying Precedent for the Fair Funding Review
Adding to concerns, the government has initiated a fair funding review, aimed at making permanent changes to how central government funds are distributed to councils. However, CCN warns that the Local Government Finance Settlement has set a troubling precedent, raising fears that the review will not be based on objective evidence. Should this pattern continue, county authorities could face further financial losses running into hundreds of millions of pounds.
Final Thought: A Call for Fairness in Local Government Funding
The financial future for county and rural councils looks increasingly precarious. With budgets under severe strain, the government’s approach to funding distribution must be reconsidered to ensure fairness for all local authorities, not just urban centres. Without urgent intervention, communities across the country will feel the impact of diminishing services and rising costs, deepening the divide between urban and rural areas. The CCN’s warning is clear: unless funding decisions become more equitable, county councils will be left struggling to provide even the most essential services.
You can download CNN’s response to the provisional settlement here, and read a press release on their submission and budget survey here.
For more of Chamber UK’s analysis on issues facing county councils, please click here.