Expenditure Plans (Hansard, 3 December 1997)

§ Mr. Dewar

The attached table outlines my plans for allocating the total expenditure for Scotland within my responsibility.

I have been able to improve significantly on the plans for the local government settlement. Following extensive consultation with the Convention of Scottish Local Authorities, I propose to increase the level of Government Supported Expenditure by 2.2 per cent.—over £133 216W million—and the level of Aggregate External Finance by 0.6 per cent., or £33.1 million, in both cases after adjustments for the transfer of responsibility for funding nursery education and the additional resources provided in the current year for policing the Commonwealth Heads of Government meeting.

Next year, Scottish local authorities will receive Government support through AEF of nearly £5.3 billion, £91 million greater than the published plans, which represents over 37 per cent. of the total Scottish Office budget. On top of that local authorities will receive a further £75 million of support to fund pre-school education, £9 million more than the published plans, £7 million for Early Intervention and £1 million for Alternatives to Exclusion, plus £325 million of non-housing capital allocations.

I am also announcing today provisional capping principles which will allow local authorities to increase their capped expenditure by 3.4 per cent. or £191 million, almost £150 million more than the inherited plans. The proposed regime is tiered to allow councils spending close to GAE a greater increase in expenditure than those spending well above GAE.

Government Supported Expenditure

I propose that Government Supported Expenditure (GSE) for 1998–99 should be set at £6,223.9 million. This compares with previous plans of £6,132 million.

Grant Aided Expenditure

Local authorities will incur an estimated £728.8 million on loan and leasing charges in 1998–99. After deducting this sum from the GSE total, £5,495.1 million is available for allocation as Grant Aided Expenditure (GAE). This GAE amount is 3.7 per cent. or almost £198 million higher than that for the current year (after making the above adjustments). I shall announce GAE figures for individual local authorities as soon as possible.

Aggregate External Finance

I further propose that Government support for local authority current expenditure-that is, Aggregte External Finance (AEF) which consists of Revenue Support Grant, Specific Grants and Non-Domestic Rate Income—for 1998–99 should be set at £5,271.3 million, which compares with the previous plans of £5,180 million. Proposals for the distribution of AEF to individual local authorities are likely to be isued to councils before Christmas. I announced yesterday that the National Non-Domestic Rate poundage would be 47.4p, the same as in England.

Capping

I have the power to cap a local authority either where I consider that its planned expenditure is excessive or where there is an excessive increase in its planned expenditure as compared with the previous year. My provisional capping principles for 1998–99 are: any increase in budget between 1997–98 and 1998–99 of more than 1.75 per cent. will be an excessive increase if the resulting budget is above the council's GAE for 1998–99; any increase in budget between 1997–98 and 1998–99 of more than 1.25 per cent. will be an excessive increase if the resulting budget is more than 2 per cent. above the council's GAE for 1998–99; 217W any increase in budget between 1997–98 and 1998–99 of more than 0.75 per cent. will be an excessive increase if the resulting budget is more than 4 per cent. above the council's GAE for 1998–99;

The Scottish Office public expenditure plans: Allocations for 1998–99
£ million
	1997–98 Estimated outturn	1997–98 Planned Provision	1998–99 Planned Provision	Changes	1998–99 Revised Provision
Central government expenditure (including public corporations other than nationalised industries)
Agriculture, Fisheries and Food	565	565	538	4.0	542
Industry, enterprise and training	592	591	584	-1.3	583
Roads and transport	284	282	300	-22.8	277
Housing	268	268	261	39.0	300
Scottish Homes loan book sale¹	-80	-80	0	—	0
Scottish Homes debt repayment²	-59	-59	-48	—	-48
Other environmental services	325	325	321	5.6	327
Law, order and protective services³	479	479	465	-4.4	461
Education	1,221	1,219	1,245	5.9	1,251
Arts and libraries	81	81	77	0.3	77
Health	4,393	4,376	4,475	106.6	4,581
Social Work services	61	61	61	3.0	64
Other public services³	158	158	146	17.5	163
Total central government expenditure	8,289	8,267	8,424	153.4	8,578
Local authority capital expenditure (excluding Water)	568	568	552	—	552
of which:	342	342	325	—	325
Single allocation	180	180	180	—	180
HRA
Other	45	45	47	—	47
Provision to match receipts from European Social Fund and European Regional Development Fund	155	160	176	-52.9	123
Central government support to local authorities' current expenditure⁴	5,255	5,255	5,172	85.6	5,257
of which:
AEF⁵	5,220	5,220	5,165	87.6	5,252
of which:
Specific grants⁶	412	412	420	-4.0	416
Nationalised industries' financing limits⁷	22	22	17	9.5	26
Non-Control Total Expenditure from Windfall Tax	21	—	—	74	74
of which:
New Deal for Schools	9	—	—	27	27
Housing capital receipts initiative	12	—	—	44	44
Childcare	—	—	—	3	3
Total expenditure within the Secretary of State's responsibilities⁸	14,309	14,271	14,341	269	14,610
of which, the Scottish Block⁹	13,702	13,685	13,786	182	13,968
¹ Reflects the repayment of loans to the National Loans Fund which will fall due in 1997–98 following the delayed disposal of Scottish Homes portfolio of loans to housing associations.
² Scottish Homes' repayment of debt from capital receipts.
³ From 1998–99 departments will take on responsibility from PRS for the buildings which the government owns and occupies. From 1998–99 they will no longer pay rents to PRS, but will pay capital charges on the value of the property. This has resulted in a reduction in planned expenditure for 1998–99 of some £10 million on the LOPS programme, relating to the Scottish Courts estate, and £10 million on Other Public Services, relating to the Scottish Office, GRO(S) and SRO estates.
⁴ Includes Housing Support Grant of £15 million/5 million.
⁵ AEF comprises revenue support grant, income from non-domestic rates (NDRI) and grants to local authorities for specific purposes.
⁶ Specific grants include-police £334 million/£339 million, urban £45 million/£43 million, mental illness £13 million/£13 million.
⁷ Includes Caledonian MacBrayne and Highlands and Islands Airports Ltd.
⁸ As a result of rounding, the figures may not sum to the totals shown.
⁹ The Scottish Block comprises all expenditure within the responsibility of the Secretary of State with the exception of Agriculture, Fisheries and Food, and nationalised industries' external financing requirements.

218W

any budget for 1998–99 more than 12.5 per cent. above the Council's GAE assessment (as admusted if necessary) will be excessive save that if that budget is no greater than the budget set by that council for 1997–98, the council will not be capped.