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Large cuts in councils' capital spending next year will be at the top of the agenda when the local authority associ...
Large cuts in councils' capital spending next year will be at the top of the agenda when the local authority associations meet environment secretary John Gummer on Monday.

'There will be significant cuts in capital spending next year which will be devastating for some authorities,' said Association of Metropolitan Authorities chair Sir Jeremy Beecham, who will lead the association side at the consultative council on local government finance.

The associations say capital spending will be slashed by £700 million or 10% next year.

Sir Jeremy said it was unrealistic for ministers to assume shortfalls could be made up by the private finance initiative given the long lead in time it takes to get projects off the ground.

Warnings that council tax increases are set to increase by double figures in some areas and that services will have to be cut will also be reiterated.

'There are no easy options,' said Sir Jeremy. 'If John Gummer pretends there are easy options for funding the teachers' pay award above inflation then it is a con.'

The Association of District Councils will make a separate plea to delay changes to part of the standard spending assessments which compensates their members for carrying out county services.

Districts, which face the hardest settlement in 1996-97, stand to lose £40m of spending power to counties from the change to the concurrent services adjustment.

ADC head of finance John Blundell said it was introduced without adequate discussion and claimed the formula needed to be reviewed to take account of social service activities of districts which are not currently included in the calculation.

The AMA will call for the dropping of plans to cushion the impact of this element of SSAs. It claims it only moves money within county areas and has no overall impact on tax levels.

The AMA says allowing this compensation leads to a 'perverse' situation where the share of SSA reduction grant going to shire districts will increase from £28m to £39m while its members face a reduction.

The SSA distribution system in general will also come under fire from the AMA, which claims the overall loss next year of spending power by its members shows it is 'generally biased against the needs of deprived urban areas'.

The district delegation will also ask for the new 'passporting' principle, which allows councils a more generous cap to take advantage of increases in SSA, to be extended to 22 districts. This would allow them to benefit from changes to the rent allowances element of SSAs.

It will claim that the special grant to cushion changes to the distribution formula favours shire areas at the expense of its members.

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