Spending cuts will see rural communities lose "a lot of services altogether", unless the Big Society genuinely hands down powers to local level, a Westcountry peer has warned.

Ex-Cornwall Liberal Democrat MP Matthew Taylor, who became Lord Taylor after being introduced to the House of Lords last week, says the countryside can survive deep cuts to public spending.

But speaking to the Western Morning News for the Saturday Interview, he said: "If the cuts take place without changing the way in which services are delivered in rural communities, a lot of small rural communities will lose a lot of services altogether."

But rural areas, likely to be hit harder than built-up areas if cuts are metered out evenly, can cope if the Government is "serious" about the Big Society and "you allow communities far more freedom of action and empower them in setting policy and unlocking funding".

Lord Taylor is preparing a report, called the Rural Challenge, that will be a companion piece to his influential review on affordable housing in the countryside.

The report is to focus on how to "deliver the Big Society – sustainable communities – in rural areas" in era of less money.

In a wide-ranging interview, Lord Taylor says talk of Lib Dem discontent over its coalition with the Conservatives is exaggerated.

He said: "If the Press are looking for differences of opinion they won't find it hard to find in any political party.

"I don't think much can be read into it at the moment. If Tony Blair and Tony Benn can be in the same political party for several decades... that's a coalition in disguise."

He goes on: "If there's tension I think that's coming from the Conservative right rather than from Liberal Democrats."