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FORSYTH ANNOUNCES CHANGE IN SCOTS CAPPING LIMITS

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Scottish secretary Michael Forsyth has announced a change in his provisional capping principles for 1997-98. ...
Scottish secretary Michael Forsyth has announced a change in his provisional capping principles for 1997-98.

Fifteen councils will benefit from the change.

Overall they will be able to spend an extra£10m on key services, but there will be no increase in total resources - capital or revenue - made available to local government.

Mr Forsyth said:

'A number of relatively low spending councils have argued that it is unfair that they should be permitted only the same year-on-year increase in capped expenditure as high spending councils.

'Against this background, I have decided to revise my provisional capping principles for next year. Instead of all councils being permitted a 0.5 per cent increase in their capped expenditure, I am introducing a tapered system, as follows:

-- councils which budget to spend between zero and two per cent above their Grant Aided Expenditure figure for next year will be permitted a 1.5 per cent increase in capped expenditure;

-- councils which budget to spend between two and four per cent above their GAE figure will be permitted a 1.0 per cent increase in capped expenditure;

-- councils which budget to spend between four and twelve and a half per cent above GAE will continue to be able to increase their capped expenditure by 0.5 per cent;

'This change in capping limits will push up council tax levels. Overall, the increase in council tax income and consequently what is known as Local Authority Self- Finance Expenditure could be as much as£10m.

'This increase in public expenditure can be afforded only by making offsetting reductions in other expenditure programmes and my intention is to reduce the level of local authority capital consents which will be issued for next year by£10m so that overall there is no increase in the level of funding for Scottish local government.'

1. The secretary of state's original provisional capping principles, which he announced on November 26 as his overall local government finance settlement for 1997-98, allowed all councils to increase their capped expenditure by either 0.5 per cent or up to the level of their total Grant Aided Expenditure (GAE) for 1997-98 whichever was the greater.

An overall expenditure limit of 12.5 per cent in excess of GAE also applied. The revised principles introduce staged increases depending on how close councils are to their GAE. The revised permitted increases in capped expenditure are as follows:

-- 1.5 per cent if budget is 0-2 per cent above GAE

-- 1.0 per cent if budget is 2-4 per cent above GAE

-- 0.5 per cent if budget is 4-12.5 per cent above GAE

-- cash freeze if budget is more than 12.5 per cent above GAE.

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