HC Deb 02 December 1997 vol 302 cc117-8W
Mr. Caton

To ask the Secretary of State for Wales what proposals he has for local government revenue spending and grant support in 1998–99; and if he will make a statement. [19122]

Mr. Ron Davies

Following consultation with representatives of local government in Wales, I propose that the provision for local authority revenue expenditure (total standard spending) in 1998–99 should be £3,090.5 million. This represents an increase of £120 million, or 4 per cent. on the comparable level of funding for 1997–98. The provision includes £190.2 million for care in the community, the additional £50.3 million revenue spending for schools I announced on 2 July, and extra provision to help local authorities achieve the Government's policy objectives for nursery education.

For local authorities, I intend to set provisional capping principles which will allow, on average, for a basic increase of 3 per cent. on 1997–98 budgets, an average of 4.6 per cent. when a number of capping disregards and the passporting of standard spending assessment increases in full are taken into account. The provisional capping principles allow local authorities further headroom for expenditure in addition to that provided by total standard spending.

I propose to set central government support for total standard spending through aggregate external finance at £2,702 million. Within this support, I propose to make available £1,831.1 million in revenue support grant/council tax reduction grant (includes an extra £6 million to help limit council tax increases); £612 million in distributable non-domestic rates; and £258.9 million in specific grants.

If local authorities spend in line with the proposed capping principles, council tax bills for band D properties should, on average, increase by about £1.20 a week. However, if councils use only a small part of planned efficiency savings to keep council tax bills down, or draw from reserves, I believe that average increases in council tax bills next year for band D properties should not exceed about £50 a year or £1 a week. The council tax reduction scheme is designed to limit the maximum increase in any authority for spending at the capped level to under £1 a week for band A properties to around £2.50 a week for band H properties.

Looking further ahead, the Welsh Local Government Association has sought stability for the next two or three years and asked for a fundamental review of the system for distributing grant in readiness for the National Assembly for Wales. I have agreed to both these requests and plan to commission jointly with the Association an independent assessment of the current arrangements for calculating standard spending assessments. I hope that an interim report will be available next summer.

Further information on the proposed settlement, including details for individual authorities, will be announced next week.

I am making a separate announcement today giving details of the settlement for police authorities.

My Department has written today to the Welsh Local Government Association and all local authorities in Wales to initiate a consultation on my proposals for next year's settlement. Copies of the consultation letter will be placed in the Library of the House.