Local Government Finance (Hansard, 1 February 1999)

§ Mr. Prescott

I have today laid before the House the Local Government Finance Report (England) 1999–2000 and the Special Grant Report (No. 37). These reports establish the amounts of revenue support grant (RSG) and non-domestic rates (NDR) to be paid to local authorities in 1999–2000, and the basis of their distribution; and provide for Standard Spending Assessment (SSA) Reduction Grant and Central Support Protection Grant to be paid to certain authorities for 1999–2000. Drafts of these reports were issued for consultation on 2 December 1998. The Department received written representations from the Local Government Association and the Association of London Government, as well as from 215 individual local authorities and six local authority groups. My Ministerial colleagues at DETR also met the Associations, 72 delegations from local councils and four from local authority groups.

My proposals included changes to grant distribution to give a fairer system. Having considered the views of the local authority associations and others who have commented on my initial proposals, I have decided to make only the changes in the SSA methodology which formed the basis of consultation, and no others. The SSAs for individual authorities may be slightly different from those at consultation, generally reflecting more accurate data that have become available since then.

However, changes in the method of distribution mean that some authorities do much less well than others. The change to the formula for children's social services, in particular, has had a serious impact on some authorities. Following representations, I have concluded that I should make some changes to my proposals for a Central Support Protection Grant. This will ensure that authorities with education responsibilities can continue to provide services while they adjust their spending plans. I shall therefore provide an extra £30 million in Central Support Protection Grant to ensure that all authorities with education and social services responsibilities receive at least 1.5 per cent. more grant in 1999–2000 than they did in 1998–99. I can also confirm that no local authority will receive less grant in 1999–2000 than they did in 1998–99.

I also received representations from local government on council tax benefit subsidy limitation. I have considered these carefully but decided to make no change to the scheme I proposed on 2 December.

This year's local government finance settlement is the most generous since the introduction of the council tax. We have made grant distribution fairer. No authority will lose grant next year. Many will benefit from substantially increased resources, reflecting a 5.5 per cent. overall increase in funding.

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For the longer term, we have published SSA totals for the next three years, and do not expect to make further changes in the method of distribution. Authorities therefore have a firm basis for planning long term, sustained service improvements.

There is no excuse on the basis of this settlement for councils to inflict steep council tax rises on their local communities. Our increased funding for local government is generous, but affordable. We look to councils to strike the same balance.

Last year we produced, for the first time, a Plain English guide to local government finance. This was widely welcomed, and I have arranged for an updated edition to be produced.

I shall be sending copies of these reports and the Plain English guide to all authorities, together with tables showing each authority's Standard Spending Assessment and its entitlement to RSG, NDR and special grant. Copies of the reports, tables, and the guide are available in the Vote Office and the Library.