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FINANCE SHAKE-UP 'POSES MAJOR THREAT' TO RURAL COMMUNITIES

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A behind-the-scenes technical review of local government finances poses a major threat to fragile rural communities...
A behind-the-scenes technical review of local government finances poses a major threat to fragile rural communities, a coalition of sixty country councils has warned.

The government is conducting a three-year review of how local grants and handed out, how needs are assessed.

In the first-event independent evaluation of the options under review, published on Monday, local authority finances specialist Rita Hale argues that the government is contemplating changes which will be harmful to rural areas.

Mike Capes, chairman of the Rural Services Partnership, which commissioned the report and campaigns for more resources to be channelled into rural areas, said:

'We have welcomed the government's review of the existing grant system of Standard Spending Assessments, which has been criticised for being difficult to understand.

'But it is becoming increasingly clear that, in its drive to change hat system, the government is leaving fairness behind.

'Rural deprivation is often hidden - but that does not mean the government should ignore it.

'We now need a rural taskforce to provide a comprehensive assessment the needs of hard-pressed country areas, in the same way that urban taskforce recently did for the cities.'

Among the options under consideration, and Rita Hale's objections to them, are:

- more specific grants: the historical evidence is that urban areas take the lion's share of these

- bidding for grants to cover basic services: this will favour urban areas which have more resources to put together glossy bids; it is also a recipe for croneyism and a charter for lobbyists, as the allocation of resources will be entirely at ministerial discretion

- linking grants to performance: this could prove a double whammy for taxpayers in poor performing authorities, who enjoy a lower standard of services, and higher taxes when grants are cuts as a result

- regional distribution: this could create local divisions as communities within a regional struggle with each other for scarce resources; regional development agencies, if selected to hand out grants, tend to show an urban bias

The Rural Services Partnership believes that removing the distorting effect of London's needs from the general system of assessing grants might be one way of improving the current SSA system.

The RSP have also called for a local government 'Performance Fund' to recognise big improvements in services through a cash bonus.

* For a copy of 'Cash and the Countryside' contact LGCnet on 0171 833 7324/5.

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