COMMUNITIES AND LOCAL
GOVERNMENT News Release (236) issued by The Government News Network
on 6 December 2007
Councils in
England will receive an £8.97bn boost in funding over the next
three years, including £2.7bn next year as Local Government
Minister John Healey published Government grant figures for 2008/11.
The figures published today http://www.communities.gov.uk/documents/localgovernment/xls/576317
confirm 13 years of inflation busting increases in grant which by
2011 will be 45% more in real terms than in 1997.
Local authorities will receive £70.4bn in 2008-09, £73.5bn in
2009-10, and £76.7bn in 2010-11. Increases of 4.0%, 4.4% and 4.3% respectively.
The first ever three year settlement alongside a radically
slimmed down performance framework mean that councils now have
greater flexibility to budget and plan ahead, and make their own
decisions about spending priorities.
To boost financial flexibility further, Mr Healey also announced
new details of a programme to move £5.6bn worth of grants into
formula grant or the new Area Based Grant by 2010-11. This
includes taking the ring-fence off £3.4bn of grants, including
funding for school development and mental health, freed up to
local decision making.
Areas suffering from the most acute deprivation will also receive
£1.5bn from the new Working Neighbourhoods Fund to give councils a
greater role and freedoms to step up action to tackle worklessness
and ensure that no-one is disadvantaged by where they live. A
further £4.9bn for the Supporting People programme will help
vulnerable live independently.
John Healey said:
"This is a tight settlement for central and local government
alike, but it is fair and affordable. We are providing total
annual average increases of 4.2% - that is 1.5% above inflation
next year - combined with much greater financial flexibility.
"Councils must balance their books just like business, but
rather than simply depending on Government grants and local
tax-payers, I want them to be more ambitious and innovative using
revenue raising powers such as trading, new business rate
supplements and the community infrastructure levy, as well as
achieving efficiency savings of three per cent per year to deliver
a better deal for the people they serve.
"Keeping council tax under control remains a top priority
for the Government. We expect the average council tax increase in
England to be substantially below 5%. Councils must be under no
illusions. We will not hesitate to use our capping powers as
necessary to protect tax-payers from excessive increases.
Authorities would be unwise to assume previous capping principles
will be repeated.
The settlement also includes changes to the distribution of grant
following a major consultation to ensure the fairest system for all.
New more up to date ONS population projections issued in
September that improve the way that migrants are counted have been
used as the basis for individual authority allocations. They
provide the best available projections of population and, as
supported by most local authorities, will be used for the next
three years.
The Government is also determined to build on recent
improvements. Whilst recognising that there is no single, simple
or swift solution to the challenges, the Government is confirming
today that Karen Durrell the National Statistician will bring
together central and local government to work on ways to improve
population survey data and make greater use of administrative data.
The Government will move towards full implementation of the
fairer and improved social services formula through the removal of
floor damping. However to provide stability to all councils and
ensure no-one receives less than in previous years the grant
floors will continue as a permanent part of the system.
The grant floors will be:
* For authorities with responsibilities for education and social
services, 2.0% in 2008-09, 1.75% in 2009-10 and 1.5% in 2010-11;
* For police authorities, the floors will be 2.5% in each year; and
* For fire and rescue authorities, and for shire district
councils, the floors will be 1.0% in 2008-09, and 0.5% in each of
the remaining two years.
The Government will also make the system fairer by taking more
account of the circumstances of authorities with a low council tax
base, which tend to be in deprived areas.
John Healey said:
"These important changes, based on the principles of
certainty, flexibility, equity and stability, will provide the
fairest allocation possible to all.
"We recognise that some councils face short term population
changes and migration, and we have a programme of work to help
councils tackle cohesion and other issues related to that. In
implementing the local government settlement, we have used
improved ONS data which is the best and most accurate available. A
large majority of councils recommended using this data rather than
re-opening the settlement in years 2 and 3, and this will help to
ensure stability for councils in budgeting ahead.
"We have struck an important balance on social services to
ensure a long term fairer system of funding that takes better
account of need. But we simply cannot have a roller-coaster ride
with some areas receiving less than before. The grant floors will
ensure increases for all authorities while allowing the fairer
system of social care funding to come through.
"The current system fails to recognise the scale of need in
the most deprived areas, which is why the improved formula is
needed to provide the fairest allocation to all. Action to tackle
deprivation and worklessness is also being stepped up through the
£1.5bn Working Neighbourhoods Fund announced today."
In addition, the Government is today announcing £29bn of capital
support to local authorities. This is the first time that capital
allocations have been announced alongside the provisional local
government settlement and brings greater certainty for authorities
to plan ahead.
Notes to Editors
1. Tables showing increases in formula grant are available here:
http://www.communities.gov.uk/documents/localgovernment/xls/576317
2. A consultation on the settlement will run until 8 January 2008.
The Government has also published an outline of an asset
management strategy for Local Government which emphasises the
importance good strategic asset management at a local authority level.
Recognising that the last few years have been untypical for the
Fire and Rescue service with modernisation, pensions reform and
industrial action all affecting spending patterns, the Government
has decided not to proceed with updating the expenditure base of
the formula for Fire and Rescue authorities. We will begin a more
thorough review examining a move away from basing the formula on
past expenditure early in the New Year.
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