PEOPLE in rural areas pay more council tax than those in cities but receive fewer services for their money, a report has said.

The lobby group Sparse, which represents 50 of the country's most rural local authorities, including some in the North, said taxpayers were, on average, paying two or three per cent more than urban counterparts.

Despite this, spending on local services was about ten per cent less, it said.

On average, English local authorities spend £1354.64 per person. But among rural authorities, that figure is £1,265.44.

The average bill for a band D property across all English councils is £1,166.71. The average cost to rural council residents is £1,197.82.

A number of rural councils in the North levied some of the highest rates of council tax in the country this year.

In Prime Minister Tony Blair's Sedgefield constituency, the average cost of a band D property is more than £1,300.

This places it ahead of the English council average of £1,166 and the average in Greater London, which is £1,118.

Equally costly is Richmondshire district, where the tax for a band D property is £1,219.

Sparse said the gap between rural and urban areas was growing and that the disparity was caused by the way the Government distributed grants.

Co-chairman Steve Pugsley said the system allowed urban councils to spend more than rural areas, but charge less in tax.

He said: ''We are calling on ministers to close the widening council tax gap between city areas and the countryside. As things stand, we are confronted by plain fiscal unfairness."

Harry Irwin, chairman of Stanhope Parish Council, County Durham, who has been critical of council tax levels, said: "We certainly do not get value for money for what we pay.

"There has to be an element in the council tax based on property price, but there also should be another element introduced, I think, to make it fairer, perhaps based on the number of working people living in a house."