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FORSYTH ANNOUNCES LOCAL GOVERNMENT SETTLEMENT FOR 1996-97

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Government support for local authority current expenditure next year will amount to over 5.4 billion, The Rt Hon Mi...
Government support for local authority current expenditure next year will amount to over 5.4 billion, The Rt Hon Michael Forsyth MP, secretary of state for Scotland, announced today.

He said that on the basis of the local government finance settlement, there should be no need for cuts in front-line services or excessive council tax increases.

Giving details of the settlement for 1996-97 in answer to a Parliamentary question, Mr Forsyth said that Scottish local authorities were being treated 'very favourably despite a difficult public expenditure round'.

He had improved on last year's plans for the settlement by £106 million and had allocated Scottish authorities the full formula consequences of the English settlement.

Government Supported Expenditure was being increased by 2.08 per cent and Aggregate External Finance by 2.62 per cent (in both cases after adjusting for transfers of responsibility to and from local government).

Mr Forsyth drew attention to the fact that next year the level of local authority spending will be 31 per cent higher per head in Scotland than in England and the level of Government support 44 per cent per head higher. He also said that, in determining the settlement, he had given priority to the police and education services and also to community care.

The full text of the Parliamentary answer is:

'I have decided to improve on last year's plans and to allocate to Scottish local authorities the full amount of the extra sum added to the Scottish Block as a consequence of the English settlement. Scottish local authorities are therefore being treated very favourably despite the difficult public expenditure round.

Next year, the level of local authority spending in Scotland will be 31 per cent higher per head in Scotland than in England and the level of Government support will be no less than 44 per cent higher.

Within the settlement, priority is being given to the police and education services and a further transfer of resources is being made to local authorities in respect of their care in the community responsibilities.

On the basis of this settlement, there should be no need for cuts in front-line services or excessive council tax increases, especially if the new councils grasp the opportunity presented by reorganisation to streamline their management structures and take a fresh approach to the way services are delivered to ensure that both the national and the local taxpayer receives best value for money.

The details of the settlement are:

Government Supported Expenditure

I propose that Government Supported Expenditure (GSE) - which is the Government's view of the total amount local authorities need to spend on providing services and meeting debt charges - for 1996-97 should be set at 6200.7 million.

After adjusting for transfers of responsibility to and from local government from 1 April 1996, this is an increase of 2.08 per cent on the current year's figure.

Grant Aided Expenditure

Local authorities will incur an estimated 777.7 million on loan and leasing charges in 1996-97. This is an increase of 32.3 million over this year's figure (after adjusting for transfers of responsibility). These charges are increasing at an alarming rate and I am announcing separately my plans to bring them under greater control.

After deducting this sum from the GSE total, 5423.0 million is available for allocation as Grant Aided Expenditure (GAE). This is the amount which we think local authorities need to spend on services. This GAE amount is 1.75 per cent higher than that for the current year (after adjusting for transfers of responsibility). I shall announce GAE figures for individual local authorities as soon as possible.

Aggregate External Finance

I further propose that government support for local authority current expenditure - that is, Aggregate External Finance (AEF) which consists of Revenue Support Grant, specific grants and non-domestic rate income - for 1996-97 should be set at 5400.9 million. This is an increase of 2.62 per cent on the current year's figure (after adjusting for transfers of responsibility). Proposals for the distribution of AEF to individual local authorities are again likely to be issued before Christmas.

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