Headlines: July 9th, 2002

The Government has published proposals for altering the formula by which it awards grant to local councils.The annual grant to local councils is core to their operation, and makes up 85 per cent of the money they receive from the national pot. Yet the current formula (the Standard Spending Assessment system) for deciding how much councils get has fallen into disrepute with many councils.

Shire counties, for instance, complain bitterly that they get much less per child to spend on education than the average across the rest of the UK.

Local Government Minister Nick Raynsford is promising twelve weeks of public consultation on the plans, which he says will be fairer, simpler, more intelligible and more stable.

The consultation paper describes various options and uses current figures to show how each local authority will be better or worse off. The basic formula will be funding per head of population, with weighting for deprivation and also for any extra costs of delivery in some areas.

The consultation paper “Formula Grant Distribution: A Consultation Paper” is available at www.local.dtlr.gov.uk\review\consult\index.htm

The review arises out of a commitment to look at grant distribution made in the 1998 white paper “Modern Local Government – In Touch with the People”.

The 2001 White Paper “Strong Local Leadership Quality Public Services” confirmed that the new system would be put in place for 2003/04 following a period of consultation over summer 2002.

Reaction from the Local Government Association so far has been neutral. Representing all tiers of Government, it will have winners and losers among its members. Like many other sectors, it has called for increased investment from the Chancellor’s forthcoming spending review so that no council loses out in a climate of rising demands and expectations.