Headlines: November 20th, 2003

English local authorities are to receive an average increase of six and a half per cent in the grant they get from the Government, which is also promising councils more freedom to decide how they spend their money. The announcement received a mixed reaction from the Local Government Association. It said that while the extra funds would go half way to easing the council tax dilemma for many authorities, district councils were being short changed.Local Government Minister Nick Raynsford said the total grant for next year would rise to 54.1 billion pounds. This, he said, meant funding had risen by 29 per cent in real terms over the past seven years. Of the overall grant, 750 million pounds will be removed from ‘ring-fencing’, giving authorities more flexibility in their spending decisions. An extra 300 million is being made available to ease funding pressures on non-schools services and the local government general grant will rise by 4.7 per cent to 45.8 billion.

The government says the settlement means a minimum increase of 3.5 per cent for the largest authorities with education and social services responsibilities with average increases for those authorities at 5.1 per cent. The average rise will be 3.3 per cent for police and 4.3 per cent. Shire district councils will see their grant rise by and average of 2.5 per cent.

Responding to the news the LGA said the extra 300 million pounds, together with the news that the 120 million of education funding grant announced last month is to stay intact, would begin to close the 800 million pound gap in council finances that the Association warned Deputy Prime Minister John Prescott about last week.

But the LGA said the government had short-changed district councils leaving many of them with no choice but to put up council tax. Most district councils, it said, would receive a below-inflation grant increase, starting at 2.2 per cent. Even districts that do best under the settlement will receive only a maximum grant increase of 2.8 per cent.

The LGA is also concerned that the Government’s priority for education comes at the expense of other services. For 13 authorities with education and social services responsibilities, the entire grant increase will have to be ‘passported’ in full to schools, leaving no increase at all for other services. Another 18 authorities will have practically no room for manoeuvre once they have delivered Charles Clarke’s pupil guarantee to schools and the LGA said it would again be council-tax payers and users of non-school services, including vital social services, who will be left picking up the pieces.

There is now to be a period of consultation on the Government proposals. Information setting out all funding announced in the Local Government Finance Settlement is available on the ODPM website.