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LANG ANNOUNCES SCOTTISH LOCAL GOVERNMENT FUNDING 1994-95

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Government financial support for Scottish councils will amount to almost£5.3 billion in 1994-95, Scottish Secretar...
Government financial support for Scottish councils will amount to almost £5.3 billion in 1994-95, Scottish Secretary Ian Lang announced yesterday.

Giving details of the local government finance settlement for 1994-95, Mr Lang described the settlement as 'realistic' given the low level of inflation and the government's public sector pay policy.

Mr Lang set Government Supported Expenditure for 1994-95 at £6.013 billion. This is an increase of 3.5% on the current year's figure after adjusting for the transfer of the careers service to central government.

Excluding the resources transferred to council to cover care in the community and independent living fund responsibilities, the increase is 2.25%.

Grant Aided Expenditure for 1994-95 will be £5.260bn after a £0.8bn top slice for loan and leasing charges, a 3.42% increase on the current year, Mr Lang said. This adjusts to 2.23% after transfers to councils are taken into account.

Government determined support for council current expenditure - Aggregate External Finance - was set at £5.272bn, an increase of 2.41% or 0.97% adjusted for transfers.

Mr Lang also announced provisional capping principles for next year. They are:

1: any increase in budget between 1993-94 and 1994-95 of more than 1.75% will be an excessive increase if the resulting budget is above the council's GAE assessment for 1994-95

2: any increase in budget between 1993-94 and 1994-95 of more than 1.25% will be an excessive increase if the resulting budget is over 5% above the local authority's GAE assessment for 1994-95

3: any increase in budget between 1993-94 and 1994-95 of more than 0.75% will be an excessive increase if the resulting budget is over 10% above the council's GAE assessment for 1994-95; and

4: any budget for 1994-95 more than 12.5% above the council's GAE assessment will be excessive save that a council will NOT be capped where: (a) the budget is 30% or less above the authority's 1994-95 GAE assessment and no greater than the budget for 1993-94; (b) the budget is not more than 60% or less above the 1994-95 GAE assessment and at least 5% below the 1993-94 budget; and (c) the budget is at least 10% below the 1993-94 budget.

'These principles are necessarily provisional. Before taking my decisions on capping, I will, of course, take into account all appropriate considerations', Mr Lang said.

The council tax transitional relief scheme will continue in 1994-95 so that those taxpayers who faced the largest increase in the current year will continue to receive assistance at an appropriate level, he said.

In general, they will receive the amount of relief granted in 1993-94 less an amount ranging from £67 a year for band A to £137 a year for band H. The scheme will cost an estimated £5m and this will be funded in addition to the AEF total.

Mr Lang said: 'In determining the local government finance settlement for next year, I have taken full account of the views the Convention of Scottish Local Authorities have expressed to me.However...I regard their proposals as unrealistic, especially given the government's view that increases in pay for public sector employees next year would require to be funded by efficiency savings.

'The settlement includes provision for additional burdens being placed on local authorities next year including the introduction of devolved school management, child care and preparing for local government reform and water and sewerage restructuring.

'Having regard to the low level of inflation and the government's approach to public sector pay, this is a realistic settlement. I hope that in the light of it, local authorities will budget sensibly for next year. If they do not, I shall not hesitate to use my capping powers'.

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