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FRONT LINE FIRST - FINANCE

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the social and economic data from the 2001 census can be used to give more money to those areas that need it most, ...
the social and economic data from the 2001 census can be used to give more money to those areas that need it most, but it does not seem this is likely to happen until 2006-07.

2001 mid-year population estimates, used for 2003-04 revenue grant calculations, will come from census data. The bulk of the information about deprivation, ethnicity and housing conditions will only arrive in 2003. The earliest it can be used in the grant system will be in 2004-05.

But, the government promised in the local government white paper to abolish standard spending assessments and introduce a fair grant system in 2003-04. It has also said that for three years - up to 2005-06 - the same formulae will be used. Can it use 2001 census data without compromising these policies?

The obvious answer is to put the new data into the formulae that are using 1991 data. This will lead to big shifts in grant between authorities compromising the fairness of the formulae.

The solution is to re-estimate the formulae. However, once one begins to re-estimate these relationships then the weights on the indicator data change and so do the formulae. Because of the formulae freeze this option appears to have been ruled out.

Alternatively the new data could be ignored. This has the merit of maintaining the formulae freeze, but also undermines the fairness objective.

For completeness, the DTLR paper on this issue includes an option to include only that updated information that makes no difference to the distribution of grant. This appears completely daft.

There is just one way out. Civil servants will have to define 're-estimating formulae to accommodate census information' as a data change and not a change in formulae. Then the government can have its policy cake and local government will be able to eat it.

Steven Hughes

Director of finance, Brent LBC

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