Ministry of Housing, Communities & Local Government
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Government sets out further detail on local government savings

The Government has today published details of the £1.166bn Local Government contribution to the £6.2bn cross government savings in 2010/11. Communities Secretary Eric Pickles has confirmed that no local authority will face reductions in their revenue grant of more than 2 per cent.

The £6.2bn savings represent the first step in the Government's efforts to tackle an unprecedented £156 billion deficit inherited from the previous government in order to restore confidence in our economy and support the recovery.

Unless borrowing is reduced, interest on Government debt will hit £70 billion a year by 2014-15. This is more than is currently raised from council tax, business rates, stamp duty and inheritance tax combined.

Ministers have given careful consideration to how savings can be found without affecting the quality of key frontline services. The priority has been on driving out Whitehall waste with the brunt of the cuts being borne at the centre.

  • Communities and Local Government has been asked to find £780m savings in 2010/11. Departmental and Arms Length Body running costs are therefore being reduced by 10 per cent.

The need to act quickly to reduce the deficit means that Government departments have had to make difficult decisions about reducing grants to local government. Shielding the frontline has underpinned decisions on where savings can be found.

  • The £29bn general grant, the main source of funding that local government receives every year, is not being reduced. This will ensure that key frontline services can be protected and prevent council tax rises.
  • Local Government is being asked to contribute £1.166bn to overall savings. No individual local authority will face a reduction in their revenue grant of more than 2 per cent.

Government is reducing the management burden of authorities and giving councils the extra flexibility they need to concentrate on local priorities and protect the frontline.

  • Reduction in revenue and capital non-schools ring-fencing this year from 10.7 per cent (£4.5bn) to only 7.7 per cent (£3.2bn) as a first step to giving councils more freedom over spending decisions. In addition, a major scaling back of quangos puts local government centre stage in meeting the needs of local residents.

All councils will, by January 2011, be publishing online details of their spending over £500. This will mean local taxpayers will be able to see how councils are spending money-helping protect frontline services, encouraging greater efficiency and shining a spotlight on waste.

Communities Secretary Eric Pickles:

"The nation's deficit is running at £156bn. Reducing that deficit, putting the finances back on a stable footing and continuing to ensure economic recovery is the most urgent issue facing Britain. Tough fiscal times will be challenging for all, but the reductions have been made to reflect the Government's policy of decentralisation and a scaling back of the quango state.

"The detailed spending decisions outlined today show a clear determination to make the necessary savings whilst minimising the impact on essential frontline services like rubbish collections and protecting spending on schools and Sure Start. We have focused attention on reducing the centre and it is here that the reductions are the hardest.

"Steps have been taken to limit the impact on local authorities and make savings proportionally. Councils have been given the flexibility they need to determine where they make savings. We are clear that no extra burden must fall on local taxpayers. We are committed to freezing council tax in England for at least one year, and seek to freeze it for a further year, in partnership with local authorities."

The details being published today will enable local government to get on with the work of managing their budgets effectively.

The Government recognises that it will be challenging for local authorities to make in-year savings, as it is for other parts of the public sector. But Ministers are clear that delaying the cuts now will simply compound the impact on authorities for the future. For all grant streams the Government is satisfied that it has adopted a fair approach to making the necessary reductions.

Notes to editors

1. Local Government will make a contribution of £1.166bn towards the overall saving of £6.2bn across Government in 2010-11 through reductions in individual grants to Local Authorities. This is made up of:

Department for Education  £m
Revenue  
Reduction in the overall amount available to local authorities through Area Based Grant (ABG) from DfE. 311.0
Total DfE  311.0
Department for Transport
Capital
Integrated Transport Block 150.8
Major Projects 61.4
Yorkshire and Humber ITB transfer 23.5
Capital detrunking 6.8
PRN networking funding 5.9
Urban congestion fund 7.9
Road Safety capital grant 17.2

Total capital

273.4
Revenue  
Smaller grants, of which: 15.0
Kickstart 2009   5.0
Other funding support, as yet unallocated  10.0
Area Based Grant - Road Safety revenue grant  20.6
Total revenue 35.6
Total DfT 309.0
Communities and Local Government (CLG)  
CLG Departmental Expenditure Limit (DEL)   
Capital   
Housing Market Renewal    50.0
Gypsy & Traveller site grant  30.0

Total capital 

 80.0
Revenue  
Housing and Planning Delivery Grant  146.0
Connecting Communities  19.1
Other cohesion funding  5.0
Area Based Grant - Supporting People administration  30.0
Area Based Grant - Working Neighbourhood Fund  49.91
Area Based Grant - Local Enterprise Growth Initiative  17.5
Area Based Grant - Prevent  7.0
Area Based Grant - Cohesion  4.0

Total revenue

 278.5

Total CLG revenue and capital

 358.52
Local Government DEL  
Local Area Agreement Reward  125.0
Local Authority Business Growth Incentives scheme  50.0

Total

 175.0
Department for Environment, Food and Rural Affairs  
Capital  
Contaminated Land 7.5
Total 7.5
Home Office  
Revenue  
Reduction in the overall amount available to local authorities through Area Based Grants (ABG) from HO.  6.0
Total   6.0
Adjustment grant  -1.1
Grand total revenue  805.0
Grand total capital 360.9
Grand total local government grant reduction 1,165.9

1 Includes £4.9m of DWP funding for WNF
2 Includes £4.9m of DWP funding for WNF

2. The CLG grants above, total £353.5m (excluding those on Local Government DEL), and are part of the £780m in year savings to be made by CLG. The other CLG programmes which make up this £780m reduction are set out in the following table.

Reductions in CLG DEL

Programmes: 2010-11 Savings £000's % Saving Description 
Cutting waste - CLG, Quangos and lower priority programmes 90,421    
Running costs for CLG and its Quangos 50,000 10 Efficiency savings from 2010-11 budgets
Running costs - Regional Development Agencies 17,000   Efficiency savings from 2010-11 budgets
Fire - New Dimensions Programme 5,000 10 Procurement Saving
Crosscutting Cohesion & Extremism 3,100 100 Unallocated funding
Thames Gateway 500 10 Unallocated funding
Cohesion & faith (non Local Government element) 3,235 32 Unallocated funding
Prevent (non ABG element) 6,586 53 Unallocated funding
Unallocated funding 5,000 100 Unallocated funding
       
Regional Development Agencies 186,000 20 Savings in line with plans to restructure regional tier
       
Housing Programmes 150,000 4  
National Affordable Housing Programme 100,000 3 Funding announced but not yet allocated
Kickstart 50,000 12 Funding announced but not yet allocated
TOTAL 426,421    

In addition, £10.9m will be cut from CLG's element of the Olympics funding contributing to the announced £27m saving across Government.

3. The following table showing the £0.405bn (26 per cent) savings to be made from Local Government DEL (the Departmental Expenditure Limit managed by CLG which holds all Government budgets for, or in relation to, local government which are not specific to a particular local government service), apart from the two specific grants to local authorities on this DEL (LAA Reward and LABGI) which are part of the £1.166bn reduction in local authority grants and included in the first table above:

Reductions in Local Government DEL

Programmes: 2010-11 Savings £000's % Saving Description 
PFI Special Grant 160,000 15 Underspend
Valuation Office Agency    17,000 10 Efficiency Savings from 2010-11 budgets
Improvement, Transformation and Efficiency   40,500   33 Efficiency Savings from 2010-11 budgets
Local Area Agreements Reward Grant 125,000 100 Reduction in grant
Local Authority Business Growth Incentives 50,000  100  Reduction in grant
Inspection Grant to the Audit Commission 10,000 51 Efficiency Savings from abolishing CAA
Valuation Tribunal Service    700 6 Efficiency Savings from 2010-11 budgets
Standards Board for England   1,450  18 Efficiency Savings from 2010-11 budgets
TOTAL 404,650 26  

4. Details of grant reductions to individual local authorities:
http://www.communities.gov.uk/documents/localgovernment/xls/1611273.xls

5. Ring-fences removed from local government funding streams:
http://www.communities.gov.uk/documents/localgovernment/doc/1611282.doc

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