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CAPPING: GOVERNMENT IDENTIFIES HIGH-SPENDING COUNCILS

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Seven high-spending local authorities have been identified for ...
Seven high-spending local authorities have been identified for

capping this year, local government minister Nick Raynsford announced

today.

The government is also proposing to use its capping powers to ensure

next year's spending will not be excessive for a further seven

authorities.

The authorities identified for in-year capping are: Herefordshire;

Nottingham; Telford and Wrekin; Torbay; Fenland; Shepway; and

Hereford and Worcester Fire Authority.

The authorities in line for action on next year's budget are Cumbria

Police, Northamptonshire Police, West Mercia Police, Bedfordshire

Fire, Durham Fire, Essex Fire and Nottingham Fire.

Mr Raynsford said:

'We have always said we would use our capping powers if authorities

set excessive budgets. Today we are keeping that pledge.

'This is not a step we are taking lightly. First and foremost it is

for authorities to set their own council tax. But we have a duty to

protect taxpayers from excessive council tax rises.

'This year we have invested extra£3.7bn in grant to local

government - an increase of 7.3% from last year. For the second year

running every council in England has had an above inflation increase.

In total we have increased grant to councils by 30% in real terms

since 1997. This level of funding should not lead to excessive

budget increases.

'We have decided to designate six local authorities and one fire

authority for in-year capping. These authorities now have 21 days to

respond. After this we will either proceed with in-year capping or we

will take action on their budget for next year.

'In the case of the further four fire authorities and three police

authorities, we have decided to limit their spending powers for next

year rather than cap this year's budgets.

'We have constantly made it clear we were prepared to use these

powers. And these warnings have already had an effect - many councils

did lower thei r council tax rises. But some still set budgets which

were excessive, which is why we're acting today'.

Notes

1. Authorities which have been 'designated' for in-year capping now

have a statutory period of 21 days in which to respond. The

government will then consider their responses and either:

* Set a maximum budget for this year and set the level for this

budget.

* Withdraw the 'designation' and 'nominate' them for action against

next year's budget.

2. The authorities 'nominated' today for capping action in relation

to next year's budgets have 21 days in which to respond. For

'nominated' authorities the government will either:

* Set a maximum budget which authorities must not exceed next year

* Set a 'notional' budget for this year. This means next year's

council tax rises will be measured against this 'notional' budget

rather than their actual budget, forcing them to limit next year's

budgets.

3. Unless authorities accept the maximum budgets we have proposed, an

Order will be placed before parliament setting out the terms of the

final designation. We expect this to happen in July. Once the Order

is approved by parliament, designated local authorities would need to

re-bill their council taxpayers for a lower council tax amount for

2004/2005.

4. Information on capping principles, budget requirement and council

tax increases for all authorities is available on the ODPM local

government finance website.

5. For authorities in areas with a combined fire authority the budget

comparison is measured with respect to the alternative notional

amount given in 'The Limitation of Council Tax and Precepts

(Alternative Notional Amounts) Report (England) 2004/05' approved by

the House of Commons on 26th April, and the increase in Band D

council tax between 2003/04 and 2004/05 is measured with respect to

the indicative council tax for 2003/04. These figures have been

notified to authorities and are available on the ODPM local

government finance website.

All figures exclude parish precepts.

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