COMMUNITIES AND LOCAL
GOVERNMENT News Release (289) issued by COI News Distribution
Service. 26 November 2008
Local Government
Minister John Healey today confirmed a 4.2 per cent funding
increase for English councils next year - describing this £2.96bn
rise as a fair and affordable settlement for councils to continue
to support their communities in these tough economic times.
Mr Healey said that this year saw the second lowest increase in
average council tax ever, at 3.9 per cent, and he expects this
trend to continue with the average council tax rise substantially
below 5 per cent. He added that Government will not hesitate to
take capping action against excessive increases if that proves necessary.
Local authorities will receive £73.1bn in 2009-10 and £76.4bn in
2010-11 - increases of 4.2 per cent and 4.4 per cent. This means
that following a decade of above inflation grant increases local
government is now receiving an extra £8.9bn through this current
three year settlement.
This is the second year of the first ever three year funding
settlement. Along with billions of pounds moved into budgets with
no spending strings attached and a radically slimmed down
performance framework councils have welcomed this increased
certainty, equity and flexibility to budget and plan ahead, making
their own decisions about spending priorities - particularly
important in these tough economic times.
As part of this Government also today announced the Supporting
People Programme funding of £1.66bn will continue to be paid as a
named grant in 2009-10 but will be unringfenced. This is the
largest single grant to councils to help millions of people live
independently in their homes and means councils can spend this
money as they see fit while continuing to help some of the most
vulnerable people in their communities.
Local government is expected to make the same 3% annual
efficiency improvements as the rest of the public sector.
Delivering this would mean councils have an extra £4.9bn to spend
over three years on improving services or cutting council tax
pressures - worth almost £90 off the average band D council tax
bill each year. Mr Healey today published figures showing that
councils expect to make new efficiency savings of just over £1bn
in 2008-09 - similar to what was achieved in the past. But he
called for councils to go further and find more than £1.5bn new
savings every year.
In a move to ensure the public know how their council is becoming
more efficient the Minister announced that this information will
be included on council tax bills next year.
Many local authorities were among those affected by the failure
of Icelandic banks in October. The Government - with the Local
Government Association - acted urgently to ensure no local
authority faced serious short-term difficulty as a result and has
also taken action to help local authorities and other creditors
recover their money.
However, given the high level of uncertainty about how much money
they will recover as they prepare their budgets so soon after
these events, Mr Healey today announced an exceptional practical
measure so that authorities will not need to make provision in
their budgets for 2009-10 for any possible loss on these
investments. This will give them time to adjust their medium term
financial plans and be clearer about recovering their money before
making decisions which affect their budgets or council tax.
John Healey said:
"These are tough economic times when every family, business
and organisation has to tighten their belts. We introduced three
year funding exactly so councils can plan ahead, and make the
right long terms decisions for their communities to ride out
difficult periods like this. The funding increases I am
confirming today are tight, but they are fair and affordable and
will mean councils can continue to deliver quality services and
support their communities during these tough times.
"Helping hard-working families is more important than ever.
So keeping council tax under control is a top priority for
Government. This year saw the average council tax rise by 3.9% -
the lowest increase for 14 years and the second lowest ever. I
expect this trend to continue and will not hesitate to use capping
powers as necessary to protect taxpayers from excessive increases
as I did this year.
"Better value for money is rightly what the public expects
of both local and national government. At just over £1bn for
2008-09 it is similar to what councils have achieved in the past
but is not good enough now. We need to see councils find more than
£1.5bn new savings every year.
"Councils should be doing this, not because Ministers say
so. But because council tax payers and service users rightly
expect them to. So to ensure that local residents have easy
information about their council's efficiency performance and
to encourage them to challenge their council to do better this
will be included on their council tax bills next year."
As announced last year, to provide stability to all councils and
ensure no one receives less than in previous years the grant
floors will be continued. The grant floors will be:
* for authorities with responsibilities for education and social
services, 1.75 per cent in 2009-10 and 1.5 per cent in
2010-11
* for police authorities, the floors will be 2.5 per
cent in both years
* for fire and rescue authorities, and for
shire district councils, the floors will be 0.5 per cent in both years
Mr Healey also said that the nine new unitary authorities that
will be established next year must deliver affordable council tax
and their promised savings once they are up and running of over
£100m a year. He has today laid before Parliament Regulations that
enable the new councils to set their budgets, calculate their
council tax and their contributions to the non-domestic rating
pool, and to issue bills. These regulations also allow the
councils to equalise their council tax over a period of more than
one year which means they can introduce changes more gradually
over a period of up to the fifth anniversary of the reorganisation.
John Healey said:
"I am confident that on 1 April we will see nine new
councils which can and will deliver improved services, greater
efficiency, more empowered communities and stronger local leadership.
"In the coming months I expect to see these new unitary
councils deliver the savings once they are up and running of over
£100m a year which underpin the proposals that were approved by
Parliament earlier this year. But I also expect to see continued
quality and efficient local services and affordable council tax
across each area from the outset - the same as every council in
England. Average council tax increases should be substantially
below 5 per cent and I will use capping powers to protect local
tax payers in these areas and elsewhere if this is not the case."
Notes to editors
1. Full details of today's Local
Government Finance settlement can be found at: http://www.local.communities.gov.uk/finance/0910/grant.htm
2. Figures on the new efficiency savings councils expect to make
during 2008-09 can be found at: http://www.communities.gov.uk/localgovernment/efficiencybetter/deliveringefficiency/
3. The Local Government (Structural Changes) (Finance)
Regulations were laid before Parliament on 26 November 2008 and,
subject to Parliamentary approval, are expected to come into
force on 24 December 2008.
4. These Regulations make the transitional arrangements necessary
to smoothly implement the nine new unitary councils being created
for Bedford Borough, Central Bedfordshire, Cheshire East, Cheshire
West & Chester, Cornwall, County Durham, Northumberland,
Shropshire and Wiltshire from 1 April 2009.
They enable the councils that are preparing for reorganisation on
1 April 2009 to set their budgets and calculate their council tax
and their contributions to the non domestic rating pool for
2009-10, and to issue bills for that first year.
5. The Regulations also provide a procedure which the preparing
and shadow councils in the restructuring areas may elect to use,
to equalise council tax more equitably over a period of time up to
the fifth anniversary of the reorganisation. It will be for each
authority in considering its budget and council tax calculations
to decide whether or not to adopt these procedures.
6. After the reorganisation date, the new unitary councils will
have the powers necessary to undertake any end year finance
functions relating to their predecessor councils. The Regulations
will also ensure continuity by providing that anything done under
Part 3 of the 1988 Local Government Finance Act and Part 1 of the
1992 Local Government Finance Act before the reorganisation date
by or in relation to a predecessor district will be treated as if
it had been done by or in relation to the new unitary council.
This covers a wide range of matters, but importantly ensures that
billing and enforcement activity undertaken by a predecessor
authority can be continued by the new council.
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