North Yorkshire Council has begun legal proceedings against the government over the removal of the £14.3m rural services delivery grant.
Council leader Carl Les has confirmed that a letter before action has been sent to the government ahead of the authority seeking a judicial review of the decision.
The government announced in November that it was axing the £110m fund which helped councils cover the extra costs of delivering services in rural areas.
Cllr Les told members of the authority’s executive committee that the letter had been sent to the government, as well as the county’s MPs.
He said:
“The rhetoric that accompanied that decision said there was no evidence that services in rural areas cost more to deliver, that rural areas are more affluent than city areas and that councils just use (the grant) to bolster their reserves when clearly that is not the fact in North Yorkshire.
“That decision in my view is unsound so we have asked Barry Khan (assistant chief executive for legal and democratic services) to write a letter as the first steps of a judicial review.”
Mr Khan said the letter had been sent on Friday and the authority would await a response before considering its next step.
The letter challenges the government decision on three points — the consultation process, the rationality of the decision and the impact it would have on the council’s public sector equality duties for the rural population.
Cllr Gareth Dadd, executive member for finance and resources, said that with the government set to conduct a review of local authority funding, it was right that the council gave notice to ministers that it was looking at a legal challenge.
With other rural councils also losing out due to the removal of the grant, Cllr Dadd said North Yorkshire was “the first out of the traps” to take legal steps.
North Yorkshire Council says that even with a planned 4.99 per cent increase in council tax, the loss of the grant and an increase in employer national insurance contributions had left the authority with a £5m shortfall which it would need to cover from its reserves.
Councillor MArk Crane sasi the authority is some £22m worse off than it was last year as result of changes in governmetn funding and the increase in National Insurance contributions.
The Ministry for Housing, Communities and Local Government has defended the latest local government settlement, saying councils with a significant rural population would receive around five per cent more in their core spending power during the next financial year.
Ministers said the rural services delivery grant did not properly account for rural need and a large number of predominantly rural councils received nothing from it.
North Yorkshire Council's Chief Executive, Richard Flinton, says the council's finances are further impacted by the way deprivation statistics are being interpreted in the governments new funding calculations.
The Governement annouced the final funding settlements for local councils earlier this week ahead of a debate in parliament today.
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