County and rural council taxpayers to shoulder cost of funding reforms, county councils claim

Council taxpayers in county and rural areas will bear almost all the cost of forthcoming government funding reforms, new analysis by the County Councils Network (CCN) has claimed.

Details: 21.Aug.2025

The network said 90% of the extra resources available to the 38 county and rural unitary authorities over the next three years would depend on residents paying the maximum 5% council tax rise. These 38 councils would see a rise in grant funding of just £374m, it added.

Under the Government's plans, a new system for allocating funding between councils will be implemented from 2026-27, which will take account of new official assessments of councils' spending needs and their relative abilities to raise revenues themselves via council tax.

The Government plans - which are still being consulted upon - propose phasing updated allocations over three years, alongside providing funding floors for those councils due to see cash-terms reductions in funding.

The CCN's analysis found that, in contrast to county and rural authorities, nearly half of the additional funding for metropolitan authorities will come from government grants.

Sixteen county and rural councils are meanwhile expected to see cuts in grant funding totalling £470m, with all of their increases in core spending power coming from council tax, according to the network.

Even those that gain will remain heavily dependent on local taxation, with some deriving up to 99% of new resources from council tax rises, it said.

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The CCN welcomed elements of the Government's Fair Funding Review 2.0, such as new formulae for adult social care and school transport, but warned the reforms placed a "disproportionate burden" on rural taxpayers while redistributing hundreds of millions of pounds to urban areas.

The CCN's analysis follows another assessment of the reforms by the Institute for Fiscal Studies (IFS), which said the plans would create "big winners and losers", with funding reduced by a combined £2.1 billion for 186 councils, and increased by the same combined amount for 161 others.

Cllr Tim Oliver, CCN chair, said it was "simply unrealistic" to expect some of the country's largest social care authorities to sustain services under deep cuts to government grants.

He said: "Some 16 county and rural councils across the length and breadth of the country will see reductions in grant funding, while the Government's proposals place a disproportionate burden on council taxpayers in county areas to fund local services and redistribute funding to urban areas.

"Those facing cuts in government funding will inevitably have to reduce vital frontline services, while the reliance on council tax rises leaves even those with modest funding increases facing an extremely challenging funding outlook."

Cllr Oliver called on the Government to rethink the proposed funding approach and reduce the pressure on county taxpayers.

Adam Carey