Local Government Finance (Hansard, 28 January 2000)

§ Ms Armstrong

I have today laid before the House the Local Government Finance Report (England) 2000–01 and the Special Grant Report (No. 52). These reports establish the amounts of revenue support grant (RSG) and non-domestic rates (NDR) to be paid to local authorities in 2000–01, and the basis of their distribution; and provide for Standing Spending Assessment (SSA) Reduction Grant and Central Support Protection Grant to be paid to certain authorities for 2000–01. Drafts of these reports were issued for consultation on 25 November 1999. The Department received written representations from the Local Government Association and the Association of London Government, as well as from 166 local authorities and local authority groups.

Having considered the views of the local authority associations and others who have commented on my initial proposals, I have decided not to make changes to SSAs, although the SSAs for individual authorities may be slightly different from those at consultation, generally reflecting more accurate data that have become available since then.

Since the autumn, it has become clear that £35 million less than provided will be needed to meet transitional costs of local government reorganisation. I have decided that it would be appropriate to increase grant support to local authorities by £35 million to help fund service improvements at a more modest cost in council taxes.

This year's settlement provides an overall increase of 5.8 per cent. in Government grant on top of the substantial increase of 5.5 per cent. given to local authorities in the first year of the Comprehensive Spending Review. We have provided a 5.4 per cent. increase in Education Standard Spending Assessments. We have made it clear that education is the Government's top priority, and we expect councils to pass on this increase to schools, in the expectation that the great majority of schools should receive an increase per pupil at least in line with inflation. In the last three years this Government have increased grant to local authorities by £6 billion—a real terms increase of 7.8 per cent in contrast to the previous three years of a real cut in grant of 4.3 per cent.

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It is a settlement which has been generally welcomed by local authorities. We had already provided them with greater predictability by announcing three spending totals in the Comprehensive Spending Review, which sets out further increases in the pipeline for the 2001–02 settlement. We had also given them more responsibility for their spending decisions, by abolishing crude and universal capping.

The settlement ensures that no authority will lose grant next year and local authorities with education and social service responsibilities will receive grant increases of at least 1.5 per cent. It will allow councils to concentrate on their priorities and make the improvements which people wish to see to education and social services. But it also allows them to improve services while continuing the momentum of lower council tax increases.

We hope local authorities will look very carefully at the implications for council tax payers when setting budgets in the coming months.

Local authorities will wish to know that I have 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 25 November.

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. I have placed copies of the reports in the Journal Office; and copies of the reports, tables and the guide in the Library.