HC Deb 14 July 1998 vol 316 c143W
Mr. Browne

To ask the Secretary of State for Scotland if he will make a statement on the local government finance settlement for(a) 1999–2000, (b) 2000–01 and (c) 2001–02. [50725]

Mr. Dewar

My plans for the local government settlement for the next three years will allow councils to increase their spending by almost £840 million a year by 2001–02 including additional funding for pre-school education for three-year-olds.

I propose the Government supported Expenditure (GSE) should be set at £6,544 million in 1999–2000, £6,785 million in 2000–01, and £7,026 million in 2001–02.

After settling aside an amount to support loan and leasing charges, including level playing field support for Public/Private partnership projects, the totals available for allocation as Grant Aided Expenditure (GAE) are £5,778 million in 1999–2000, £5,991 million in 2000–01, and £6,194 million in 2001–02. The allocation of these totals between the main local authority service areas is shown in the table. This reflects the priority I have given to certain services, particularly education.

I further propose that Government support for local authority current expenditure—that is, Aggregate External Finance (AEF) which consists of Revenue Support Grant, Specific Grants and Non-Domestic Rate Income—should be set at £5,512 million in 1999–2000, £5,672 million in 2000–01, and £5,823 in 2001–02.

Given these increases it should not be necessary for council tax to increase on average by more than 5 per cent. per annum.

Proposals for the distribution of GAE and AEF to individual local authorities will be issued to councils later in the year.

I intend to replace crude and universal capping with a system of expenditure guidelines. I will retain the existing capping powers in reserve and will use them if council spending is excessive.

I have also decided to remove the requirement on local authorities to use 50 per cent. of certain non-housing capital receipts to redeem debt. It is estimated that this will generate an additional £75 million of spending power which can be channelled into new investment.

GAE (£ million)
Local authority service 1999–00 2000–01 2001–02
Education 2,591 2,703 2,810
Social work 1,101 1,144 1,180
Police 715 742 763
Fire 178 187 194
Other services 1,193 1,215 1,247
Total GAE 5,778 5,991 6,194