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AMA: REORGANISATION THREATENS METROPOLITAN COUNCIL FINANCES

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Reorganisation in shire county areas could result in metropolitan councils losing money, warns the AMA. ...
Reorganisation in shire county areas could result in metropolitan councils losing money, warns the AMA.

A report going to the AMA's policy committee on May 26 points out that reorganisation always costs money and the government is already anticipating this by enabling councils affected by reorganisation to borrow for initial costs and giving them a 'disregard' in capping rules for some expenditure incurred.

Because the government limits the total amount of council spending, this means there is less money for AMA authorities who are not involved in the Banham Review.

The sums to date are quite small but will increase if reorganisation gathers pace, threatening to divert already scarce resources from AMA authorities.

There is also a distributional problem because Standard Spending Assessments will not be ring-fenced.

This means that recalculating SSAs for new authorities, such as the Isle of Wight and those in the Cleveland area, could have a knock-on effect for 1995/6 on AMA authorities. Their grant entitlements and cap limits could change for the worse.

AMA chairman Jeremy Beecham said: 'Reorganisation costs should be funded by 'new money', clearly in addition to general support for local spending. Levels of capital investment or revenue budgets in AMA areas should not be cut to pay for reorganisation in shire county areas.

'It is unacceptable for the SSA of an AMA authority to change because of reorganisation in other parts of the country.'

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