Rural premium

Household squeeze shows signs of easing as wages rise

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Some good news here but don’t forget it costs the average family around 10% more to live in rural England. This article tells us:

Wages grew by 2.6% in the three months to January while the unemployment rate fell, according to new data.

The Office for National Statistics said that earnings growth was slightly higher than the 2.5% rate in the previous period.

It adds to evidence that the squeeze on household income may be coming to an end after inflation fell to 2.7% in February.

Meanwhile, the unemployment rate ticked lower to 4.3% from 4.4%.

A small increase in the number of unemployed people during the quarter did not dent the overall rise in employment over the last year.

The data was not all positive – the number of unemployment benefit claimants rose by 9,200 to 838,000 in February, that’s the highest level in more than three years.

But John Hawksworth, chief economist at PwC, said the good news in the latest figures outweighed the bad.

Provisional local government finance settlement 2016 to 2017 and an offer to councils for future years

The Government has published the outcome of its consultation into ‘Provisional local government finance settlement 2016 to 2017 and an offer to councils for future years’

this may sound a bit wordy but it sets out the model for estimating the amount of money each council and fire authority can expect to receive from central government through Revenue Support Grant and retained business rates income. You can read the summary of the consultation here

Page 9 sets out responses to the Governments proposal to pay £20 million additional funding to the most rural areas in 2016-2017 (distributed to the upper quartile of local authorities based on the super-sparsity indicator). While the additional money was welcomed, respondents expressed disappointment that this is back-loaded and does not make sufficient progress in closing the urban-rural funding gap or meeting the additional costs of service delivery in rural areas.

Yet in presenting the document to parliament the Secretary of State, Greg Clark, described “recognising that council services in rural areas face extra costs, I proposed in the provisional settlement that the Rural Services Delivery Grant should be increased from £15.5 million this year to £20 million in 2016 to 2017 – the year of this settlement – and to £65 million in 2019 to 2020”.

The RSN Rural Fair Share Campaign continues with the RSN urging government ministers to change plans that will reduce grants to rural areas at a higher percentage rate than grant reduction in urban areas over the next four years. RSN Chair Cecilia Motley said: “We plead with Government please do not do this. This is a horrible miscalculation. It will make life for hundreds of thousands of people across all areas of rural England totally intolerable.” Councillor Motley added: “Unless they are reversed, the government’s plans will hit hardest those most in need of public services. Those in need of care. Those in need of transport. Those in need of support.”

Stop robbing our countryside to pay for the cities

Powerful article from the Chair of the Rural Services Network All Party Parliamentary Group .  It tells us:

Britain “has the most reliably beautiful countryside of anywhere in the world“. So said the travel writer Bill Bryson, and who am I to argue with a bestselling author and household name? From the Lake District to the Peak District, and from the Yorkshire Dales to the South Downs and the White Cliffs of Dover, this country is awash with stunning natural scenery. I only have to cycle out of Beverley for proof that Bryson is right; my constituency is a rural area of enormous natural beauty.

There is, though, a side to rural living that is far less attractive and that garners far less interest from the media. For despite the misplaced assumption that country dwellers must be well off, rural areas are just as susceptible to challenges that those in cities face: deprivation, fuel poverty and low wages. Living in a beautiful area does not make those burdens more bearable.

On average, those that live in rural areas earn less than those living in cities. It seems particularly unfair, therefore, that rural residents pay more for their local government and receive fewer services. What’s more, that discrepancy is not going anywhere. In 2015/16, the big cities will receive £130 more central government funding for each of their residents, while their rural counterparts will pay, on average, £81 more in council tax.

It’s strikingly unfair, and it’s nothing new. Rural areas have been unjustly funded for decades. In 2012, however, after years of campaigning, we thought we were on the road to securing a fairer solution.

Three years ago, the Government agreed to give greater weighting to sparsity of population in the local government funding formula, which is the system through which councils secure funding from central government.

After years of campaigning, had we finally made our case? We certainly thought so – we thought that the historic wrong of rural underfunding was finally being righted, with rural areas in line to gain some £250 million a year to help redress the urban bias.

Perhaps we should have known it was too good to be true. For just as soon as this gift was proffered, it was taken away, with some three-quarters of these gains immediately lost due to ‘damping’ – a method used by the Government to minimise big swings in funding grants. The only concession was a new Rural Services Delivery Grant worth £15.5 million in 2015/16. Yet broken down by head, it’s a pittance; somewhere in the region of £1.10 per person.

Giving cities power over purse strings is good – but don’t forget rural areas

Clive Betts of Sheffield has something useful to say about cities in this article but helpfully keeps the rural dimension in view – should I be surprised? If so I guess it ought to be “pleasantly” surprised. Anybody who thinks about these issues knows cities are nothing without their rural hinterlands. This article tells us:

The argument goes that if our cities are set free to control their own finances they will prosper – and so will our country. But is a country really prosperous if certain areas race ahead while the rest make do with low or no growth? Not everyone lives in a city – and certainly not in London or a core city. What happens to them?

People living in rural areas, in our smaller cities, our market towns and villages, will have to be taken into account or the proceeds of devolution will be confined to cities. England’s local government finance structure, with its system of equalisation and redistribution measures, is complex enough already. How would it change to take account of fiscal devolution to cities but ensure fairness?

We know the answer to this question at the RSN and its about recognising properly the additional cost of delivering rural services – we have a seminar coming to a place near you in January which is free and all about this very issue. More details are available from Wendy.Cooper@sparse.gov.uk

Cost of living in countryside soars by £2,000

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We have been drawing attention to the issue of higher living costs in rural places for years and the publication of this NFU report furthers our arguments. The Western Morning News has I think, the best article on the issue – telling us:

An analysis of spending on items including fuel, electricity, food and drink showed that “rural inflation” increased by 7.7 per cent over the past year, compared to the national average of 4.3 per cent.

It means a basket of 21 goods and services, from petrol and food bills to vehicle repair costs, totalled £5,992 a year for people living in rural areas. The UK average is £3,986.

The report, the insurer’s new quarterly Countryside Living Index, said the gulf was down to increased fuel and electricity prices, which had a bigger impact on people living in the countryside.

Tim Price, NFU Mutual rural affairs spokesman, said: “For some time there has been concern from our customers that rural communities are being disproportionately hit by rising prices – particularly for heating and transport.

“The results provide hard evidence that this is indeed the case.

“In many parts of the countryside in the South West, these rises are making it particularly hard for many rural dwellers to make ends meet.”

The long-standing issue of the high price of petrol and diesel in the countryside and the distances involved in getting goods to shops, as well as the miles travelled by shoppers, were largely to blame for the cost of living increase.

To misquote a Neil Kinnock Speech – “tomorrow if you decide to move to the countryside, dont get sick, dont get cold and dont lose your job!”

Funding boost for rural regions

The RSN is making real progress with a Government interested in listening to its rural hinterlands. This article from the Western Morning News profiles how our All Party Parliamentary Group has managed to get the issue of additional service delivery costs – the rural premium – right in the public eye. It explains how this issue has surfaced in terms of the debate about potential retention, at the local level, of business rates:

“Mr Pickles’ “resource review” partly centres on the system of business rates, which are put into a national pot then redistributed by Whitehall according to a complex formula of local needs.

Rural advocates say the mechanism used for distributing government grant ignores rural deprivation and under-estimates the costs of delivering services to far-flung communities.

But if money is re-directed to more isolated parts of the country, ministers are likely to face an outcry from poor urban areas, particularly if it widens the apparent “north-south” economic divide.

Yorkshire Tory MP Graham Stuart, who tabled the question, and is chairman of the all-party parliamentary group on rural services, said: “We will aim to work with him in the future to carry this forward, because until we see a fundamental change in things like health funding and local authority grant levels, rural areas will continue to fall behind.”

 Other MPs including Andrew George (St Ives) chipped in and we are starting to see a growing momentum not just on this issue but on public recognition of the additional challenges of funding services in rural areas by Government more widely.  There’s much more ground to cover on this issue – which is at the heart of our work but its great to see some significant progress being made.

British consumers starting to ration, says Asda boss

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This article is really interesting. It says:

“Judith McKenna said the true cost of living was only now “beginning to take its toll on British families” and was worried that policy-makers in Whitehall had little grasp of the impact on low income households.She revealed Asda’s own “average household” income tracking showed families’ disposable incomes were falling fast, dropping 8pc year on year in May – the largest decline “ever”.It estimates the average family now has £165 a week in discretionary spending power and are facing a £14 “gap in their pockets” forcing many to ration.”

Now I know there are many affluent people living in rural England but there are also many people who are asset rich and cash poor and many others who are just purely and simply poor. Around travel and energy costs it is more expensive to live in rural Engalnd and this article makes me reflect on what the “rural premium” in terms of additional living costs will mean for them in terms of exacerbating the impact of the fall in real incomes. Let’s hope those with responsibility for considering these things from a policy perspectie keep this issue in mind when they start to think through the impact of falling disposable incomes on communities more generally.