The total amount of revenue support grant and redistributed business rates for 2003/04 (£39.9bn) was announced in the spending review. This represents a 5.9 per cent increase on this year. When specific grants are added this increases to£51.2bn - an increase of£3.8bn or 8 per cent on this year.
'As a result of the investment announced in the Spending Review the government is continuing to deliver a real terms increase in grant to local authorities. Today's settlement means that in total there has been a 25 per cent real terms funding increase since 1997. This is good news for local government and good news for the communities they serve.
'This year's settlement is based on a fairer formula that better reflects today's pressures on local authorities. It is the result of a comprehensive consultation and I am pleased that we have eliminated a number of anomalies that were present in the previous system.'
There will be a minimum increase of 3 per cent for each authority (a minimum increase of 3.5 per cent for authorities with education and social services responsibilities). This is a great improvement on the interim promise that no authority would lose grant. It answers complaints from local authorities that inflation was not being taken into account and ensures real increases for investment in communities. The Settlement delivers:
average grant increases of 6.0 per cent for authorities with education and social services responsibilities;
average grant increases of 4.2 per cent for police and metropolitan fire authorities; and
average grant increases of 7.5 per cent for shire district councils.
Mr Raynsford added:
'I have already promised that no authority would lose on a like for like basis and I am delighted that we have been able to do much better than this and give an above inflation increase to all authorities. No authority will get less than 3 per cent and most will get much more than that. This years we have our highest ceiling with top tier and unitary authorities getting increases of up to 8% and district authorities getting increases of up to 12.5 per cent.
'Local authorities will have, understandably, been anxiously awaiting today's announcement. Some authorities have been predicting a settlement under which councils will have to introduce cut-backs or impose significant council tax increases. However, with the good increases in funding announced in the Spending Review, the realistic levels of floors and ceilings we have been able to set, and the decisions we have on the distribution of grant to local authorities, there is no reason why councils cannot continue to improve services whilst sticking to reasonable council tax increases.'
Changes have been made to the formula which distributes the total amount of government grant following a review over the summer. The new formula is based on a basic allocation plus top ups for deprivation and other needs.
The formula changes could have resulted in dramatic changes to funding for different authorities, so floors and ceilings have been used to ensure that no authority faces a reduction to their grant that could impact on budgeting for next year. The increases to the total of government grant announced in the Spending Review have ensured that floors and ceilings could be generous this year. Floors and ceilings will continue to be used in future years.
The key figures in the provisional settlement are:
Total formula grant is£39.9bn which is an increase over this year of 5.9 per cent.
Total support from government grant and business ra tes is£51.2bn which is an increase over this year of£3.8bn or 8 per cent.
Made up of
£24.3bn in revenue support grant
£15.6bn in business rates rates
£4bn in police grant
£7.3bn in special and specific grants.
There is now a period of consultation on these proposals.
Information setting out all funding announced in the Local Government Finance Settlement is available on the ODPM website.
An analysis of responses to the consultation on the formula grant review is also available on the ODPM website.
See also FUNDING SETTLEMENT FOR SCOTTISH LOCAL AUTHORITIES ANNOUNCEDon LGCnet.