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If you live in the countryside, the chances are you will pay a relatively high council tax. You are also likely to ...
If you live in the countryside, the chances are you will pay a relatively high council tax. You are also likely to receive fewer services than townsfolk. SPARSE, a lobby-group representing England's most rural councils, last week produced a manifesto arguing for fairer treatment. They were right to have done so. In the Office of the Deputy Prime Minister's 'snakes-and-ladders' funding game, if you don't keep the dice rolling, you can't win.

SPARSE has made its case at a time when there is more pressure than ever for stable authority-by-authority grant shares. Since Labour took office in 1997, the government has attempted to minimise changes in the assessment of spending need. In the aftermath of the 2003-04 revenue support grant settlement, Whitehall has made every effort to avoid further turbulence. An unchanged formula spending share causes fewest complaints; there are no consequences of inaction.

Unless, of course, you are an authority which is trapped with what it believes to be an unfair FSS. Moreover, the fall-out from the misery of spring 2003 also affects education funding. The government's decision to introduce a 'minimum funding guarantee' and then to nationalise schools' funding, has also had the effect of making life difficult for councils - and their schools - stuck with a low FSS. 'Equal treatment' looks increasingly as if it will move towards flat-rate annual increases for all.

Moreover, being told to 'wait for Lyons' would surely be a red herring. Sir Michael is considering the future of local taxation and the balance of funding. He is not expected to revise the method of need assessment within whatever grant arrangement he believes to be necessary to underpin his proposed tax system. A needs-related grant will, in some shape or form, continue to be required in any post-Lyons world.

The move to three-year settlements, though sensible in terms of longer-term budgeting, will shift local government still further towards a virtual permanent freeze on needs-related funding. The closer the ODPM and Department for Education & Skills can move towards flat-rate annual grant increases, the less pressure there will be from 'losers'. 'Gainers' never say thank-you.

A government that took office committed to making local government grants 'fairer' has taken determined steps towards freezing the pattern of funding. The machinery for negotiating grant and FSS has become ever more technical. Perhaps the time has come (and this is something the Lyons Inquiry definitely should consider) to create an independent grants commission. The political difficulties that affect grant distribution could then, in part, be transferred away from ODPM.

An institution separated from Whitehall would be less hamstrung by fear of local tax payers. Ministers would, rightly, be able to escape much of the blame for any changes in grant. There would be an opportunity to match grants to real needs. The SPARSE authorities would then have a chance to make their case.

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