Local Government Finance: Rural Areas
The question
To ask the Secretary of State for Housing, Communities and Local Government, if he will provide additional funding through the Local Government Finance Settlement for 2026-27 for the cost of delivering services in rural and sparsely populated areas.
Answered by Alison McGovern
On Thursday 20 November, we published the government response to the Fair Funding Review 2.0, which sets out the government’s plan to introduce a fairer and evidence-led funding system. In doing so, we will target a greater proportion of grant funding towards the most deprived places which need it most, ensuring the best value for money for government and taxpayers.
The government recognises that different parts of the country face different costs for delivering the same services. For this reason, we propose to take account of variations in costs between local authorities through an Area Cost Adjustment (ACA). The ACA considers differences in labour and rental costs, as well as the cost impact of longer journey times.
We are also proposing to include a measure of remoteness, to account for the potential impact on cost for rural authorities that cannot readily access local markets because of their location. Taking into consideration the available evidence and the views of stakeholders, the government has made a judgement that remoteness should be accounted for when assessing the cost of delivering adult social care services.
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