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GUMMER ANNOUNCES SETTLEMENT WITH 2.8% FUNDING INCREASE

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Every year, the government announces the sum of money which local authorities are expected to spend. Next year's f...
Every year, the government announces the sum of money which local authorities are expected to spend. Next year's figure is £44.92bn, up 3.3% on last year. This means an increase of £1.4bn and when the transitional costs of local government reorganisation are taken into account, represents a cash improvement of 3.1%.

In allocating this sum between services, I have decided to give the main priority to education. My proposal is therefore that education spending should increase year on year by 4.5%. The amount actually spent on schools remains a matter for individual local authorities, but I have no doubt that parents, governors and teachers will wish to ensure that the whole of the increased funding feed through into schools' budgets.

I propose that the level of aggregate external finance distributed to local authorities in 1996/97 should be £35.62 billion. This represents an increase of some £960m (2.8%) compared this year's figure.

I also propose that the national non-domestic rate poundage for 1996/97 should rise to 44.9 pence, reflecting the annual increase in the retail price index to September.

I propose to set the distributable amount of non-domestic rates at 12.74bn. I propose that the total of revenue support grant should be £18bn. Special and specific grants within AEF will amount to £4.88bn.

I shall announce shortly my proposals for the distribution of government grants, including my proposals for changes in the standard spending assessment methodology. At the same time I shall announce my capping intentions.

It is essential that local and central government continue to play its part in restraining expenditure. My proposals for the total standard spending, aggregate external finance and the non-domestic rate poundage represent a balanced approach to funding the demands on local authority services in 1996/97.

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