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ABOVE INFLATION GRANT INCREASES FOR ALL COUNCILS

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Every local authority will receive at least an above inflation ...
Every local authority will receive at least an above inflation

increase in Government grant for the second year running, with many

getting substantially more, local government minister Nick Raynsford

announced today.

Mr Raynsford was publishing the proposed allocation to English local

authorities of the extra £340m of Revenue Support Grant for 2004/05

announced by the chancellor in the pre-Budget report yesterday. This

money comes in addition to the £54.1bn announced in the provisional

Local Government Finance settlement last month.

The increase in formula grant will now be 5.5% compared to 2003/04,

on a like for like basis. Overall grants will increase by 7.1%. This

additional money is not ring fenced, giving councils the freedom to

make their own spending decisions.

Mr Raynsford said: 'This is a substantial investment which will

further help councils to improve public services without imposing

unreasonable demands on their taxpayers. And there is scope for

councils to improve their efficiency savings. Put together, this

means local authorities must aim to deliver council tax increases in

low single figures next year.

'Unreasonably large council tax increases will neither be justified

nor acceptable. So the government is prepared to use targeted capping

powers next year. But we hope that will not be necessary.'

The main changes are as follows:

- Floors and ceilings on grant increases for authorities with

education and social services responsibilities will increase to

4.0% and 7.5% respectively. Some authorities will receive more than

7.5% because we are continuing to provide support for increased

capital investment outside the floors and ceilings system.

- For shire districts, the floor will rise to 3%, so all districts

get an above inflation increase. There will be no effective ceiling

for districts which means grant increases of up to 12.2% for some

authorit ies.

There will be no changes in floors and ceilings for police and fire

authorities.

The consultation period on the provisional Local Government

Settlement will be extended, given the scale of this change, and will

now end on 9 January 2004.

Notes

In addition to the extra funding announced in the pre-Budget report,

the statement on the provisional local government finance settlement

2004/05 stated that the Department for Environment, Food and Rural

Affairs will be reducing spending pressures on local government by

some £25m-£35m in the waste area next year. Some £10m of this will

come from deferring the introduction of the landfill allowance

trading scheme until 2005/06.

An announcement will be made by DEFRA on this shortly.

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