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A major new 'localism' proposal to cut red tape and hand over financial control of council service improvements and training to local government leaders was announced yesterday by Communities and Local Government Minister Bob Neill.

Under new proposals, the Local Government Association (LGA) or a similar body will take control over how to use funding that gets redirected, or 'top-sliced', by Whitehall from the Revenue Support Grant (RSG) councils receive each year.

The LGA is to deliver greater openness and transparency. The LGA has from the 1st September committed to publish details of all future expenditure over £500. The LGA already seeks to abide by the principles of the Freedom of Information Act and the Local Government Secretary Eric Pickles recently called for them to be formally subject to the same FOI rules as central and local government.

At present Central Government directs the funding to be received by each of nine local government improvement organisations. In 2009-10 this 'top-slice' amounted to £45m.

In future, the total grant would be unringfenced and delegated to the designated local government body to allocate to funding programmes in the best way to improve council services, build strong local leadership, meet learning and development needs, and nurture robust local economies.

Ministers believe that removing the centrally-imposed restrictions on how funding is used will help to reduce overhead costs, red tape and waste in local improvement support, promoting better use of resources, better productivity and stronger local leadership.

Communities and Local Government Minister Bob Neill said:

"Councils know best what they need to improve services and become more efficient - many are already leading the way in sharing backroom services and management structures, and improving procurement.

"The LGA have called for this change, and have rightly taken steps to make their organisation more transparent so we can look at how to devolve this funding with confidence. By cutting the red tape around improvement funding councils can push even harder to make sure they have the tools and expertise to be fully focused on delivering frontline services that matter to people most and getting the best value for taxpayers' money."

Baroness Margaret Eaton, Chairman of the Local Government Association, said:

"The purpose of the Local Government Group is to help councils serve local residents more effectively by carrying out national tasks on behalf of the whole sector. This very welcome localism initiative will focus effort on the achievement of key national outcomes, save money and ensure that resources are used in the most effective way possible. We are delighted that the government has responded so positively and creatively to this initiative".

Notes to editors

1. The level of 2010-11 RSG top-slice funding would be set following the 2010 Spending Review in October, but the LGA has suggested a 30 per cent reduction in return for the whole amount being paid to a single specified body.

2. The consultation asks whether the RSG top-slice funding should go to a sole specified local government body and whether that should be the LGA or LGID (formerly IDeA). Full details of the consultation can be found at: www.communities.gov.uk/publications/corporate/rsgtopsliceimprovementsconsult.

3. The eight bodies currently receiving RSG top-slice funding are:

• Improvement and Development Agency, (IDEA) (known as Local Government Improvement and Development)
• Employers' Organisation for Local Government (known as Local Government Employers)
• Local Authorities Coordinators of Regulatory Services, (LACORS) (known as Local Government Regulation)
• Public Private Partnerships Programme (4Ps)
• Local Government International Bureau
• National Foundation for Educational Research in England and Wales
• National Institute of Adult Continuing Education
• National Youth Agency.

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