Mr Kynoch said: 'I am pleased to announce these capital allocations amounting to £296.5m. Overall, councils have fared well in a difficult public expenditure survey.
'While we have had to reduce the amount of resources available for capital spending, we have once again made generous provision for councils' revenue support in excess of spending plans, reflecting the priority we attach to front- line services, particularly police, fire, education and social services.
'These capital allocations are for council's ongoing capital expenditure needs and do not represent the total resources which we are making available for non-housing capital spending in 1997-98.
Bids can seek funding over three years, or even more in certain circumstances, and successful bidders will be guaranteed to receive the extra funding they are awarded. I hope to be able to announce the successful bids before the end of March.
'I am pleased to say that councils have responded extremely positively to this initiative, with most having already signalled their intention to submit at least one bid.
'We have already announced a Challenge Fund which will build up over 3 years to 100 million and I can also now announce that I am making available the first 15 million of this for successful projects and programmes requiring funding in 1997-98.
'I look forward to larger challenge fund programmes in later years. These awards will be in addition to those being made from the Transport Challenge Fund, which is another substantial source of funding available to councils.
'Councils can supplement their capital allocations by using capital from current revenue (CFCR), securing private sector contributions, by securing EC funding, and by raising capital receipts.
'They can also take advantage of the opportunities offered by the Private Finance Initiative to undertake major capital projects in partnership with the private sector.'