§ The Minister for Local Government, Regional Governance and Fire (Mr. Nick Raynsford)Further to the Pre-Budget Statement made by my right hon. Friend the Chancellor of the Exchequer, I am today announcing the proposed allocation to English local authorities of an extra £340 million of revenue support grant for 2004–05.
The Government are clear that it is right to provide this extra support to authorities to help them to improve public services. We are particularly conscious of the pressures for improvements in the areas of the environment and social services for children. The additional support will be provided as revenue support grant, which is not ring-fenced, and so can be used for any purpose.
The increase in grant distributed by formula will now be 5.5 per cent. compared to 2003–04, on a like-for-like basis: overall grants to local authorities will increase by 7.1 per cent.
97WSThe floors and ceilings on grant increases will change for authorities with education and social services responsibilities, to 4 per cent. and 7.5 per cent. respectively. In some cases, however, authorities will receive more than 7.5 per cent. because we are continuing to provide support for increased capital investment outside the floors and ceilings system.
For shire districts, the additional grant is sufficient to raise the floor to 3 per cent. so all districts will get an above inflation increase. There will be no effective ceiling for districts, giving grant increases of up to 12.2 per cent. for individual authorities.
There will be no changes in floors or ceilings for police and fire authorities.
This will mean that for the second year running, every local authority will get at least an above inflation increase, with many getting substantially more.
Tables showing grant totals and the revised provisional allocation of formula grant to all English local authorities for 2004–05 have been placed in the Vote Office and are also available in the Libraries of both Houses.
Given the scale of this change, the consultation period on our proposals will be extended and will now end on 9 January 2004. The House will then have the chance to debate the Government's final proposals in late January or early February. As is normal, the detailed allocations to individual authorities may still change as data on council tax base and capital allocations are updated.
Given the scale of the investment in local services and the scope for efficiency improvements in local government, the Government believe next year local authorities must aim to deliver council tax increases in low single figures. Unreasonably large council tax increases will be neither justified nor acceptable.
So the Government are prepared to use targeted capping powers next year if that proves necessary.
When considering whether to cap authorities, the Government will look at a range of factors including the level and increase in the council tax and the level of the budget. In areas where there is a combined fire authority, budgets for 2004–05 will not be comparable with 2003–04 because the combined fire authority is precepting for the first time in 2004–05. The Office of the Deputy Prime Minister is today issuing a consultation document which sets out the proposed methodology and the notional budget figures as a result of this change. A copy of this will be made available in the Libraries of both Houses.