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KYNOCH AGREES TO COSLA PROPOSALS ON FUNDING FORMULA

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Proposals made by Cosla for a self financing transitional scheme to deal with the allocation of funding to the new ...
Proposals made by Cosla for a self financing transitional scheme to deal with the allocation of funding to the new councils have been agreed to by Scottish local government minister George Kynoch.

Announcing the scheme yesterday in answer to a parliamentary question, Mr Kynoch stressed that local government reform offers scope for many councils to cut council tax bills.

The transitional scheme will resolve the so-called `mismatch' between the expenditure levels some councils will inherit and the level of support they would otherwise receive under the Scottish office grant aided expenditure assessment.

This scheme will enable some councils to gain immediately in year one, whilst others who stand to lose will benefit from the phased arrangements.

The text of the parliamentary question and answer is:

'My right hon Friend and I met representatives of the Convention of Scottish Local Authorities on 10 November as part of the normal consultation on local government finance matters and our next meeting is scheduled for 19 January.

'At the meeting on 10 November, the convention raised the issue of the mismatch between the levels of expenditure which a number of the new councils will inherit and the likely level of their grant aided expenditure assessments and consequently the levels of their aggregate external finance (AEF) for 1996-97.

'The convention subsequently submitted proposals for a self-financed transitional scheme under which:

- the mismatch would be evened-out in the 5 disaggregating regions (Central, Grampian, Lothian, Strathclyde and Tayside) for 'regional' services only;

- the scheme would last for a period of 3 years;

- protection to the councils concerned would, in 1996-97, be at 67% of the mismatch on 'regional' service: at 33% in 1997-98: and 0% in 1998-99

'My right hon friend and I have carefully considered the convention's proposals. In doing so, we have, on one hand, been anxious not to endorse the current expenditure levels in the areas facing a mismatch problem. But, on the other hand, we recognise that any significant turbulence in the local government finance system has traditionally been phased-in in order to protect council taxpayers who would otherwise face very large increases in their bills. On balance, we have decided to accept and implement the convention's proposed transitional scheme.

'The reorganisation of Scottish local government will provide scope for many councils to reduce their council tax below the level currently payable. Even with the transitional scheme, those councils will be able, if they maintain current levels of expenditure, to reduce tax levels next year, and they will receive their full gains by 1998-99.'

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