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LOCAL AUTHORITY DISMAY AS MINISTER GIVES CLARITY ON BUDGET PLANS

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Responding to the Welsh Assembly Government announcement about limits on councils' budgets (below), Welsh Local Gov...
Responding to the Welsh Assembly Government announcement about limits on councils' budgets (below), Welsh Local Government Association leader Alex Aldridge said:

'I am dismayed that the Assembly Government has embarked on a course of action which could eventually undermine the independence of local authorities to determine local precepts.

'Whilst we understand the anxieties to limit precepts, the reality is that we in local government face a very difficult time this year. Some of the decisions made will have real ramifications on key service areas for 2005-06.'

'Councils have made massive efficiency savings this year and have taken tough decisions over where to invest limited resources. Through this process, councils have clearly demonstrated a measured approach which disproves any suggestions of profligacy and shows that they are prepared to take the necessary tough decisions.

'As an association we have held exhaustive talks with the minister and her officials to resolve this particular area of dispute. Even at this late stage we call on the Assembly Government to reflect on the course of action which could follow this announcement and consider its impact on central-local relations.

'The WLGA will continue to make itself available to continue with constructive dialogue to avoid this unnecessary and arbitrary action.'

Welsh Assembly press release follows

MINISTER GIVES AUTHORITIES CLARITY ON BUDGET PLANS

Local government minister Sue Essex wrote to all unitary authorities and police authorities in Wales today to provide them with clarity about the limits beyond which their budgets for 2005-6 would be considered excessive.

She said: 'The circumstances of this year are exceptional. The impact of revaluation on many households makes it essential for unitary and police authorities to exercise moderation in their budget increases, so as to minimise the impact on council taxpayers moving up one valuation band.

'The Welsh Assembly Government has already played its part by committing some£11m to ensure that no council tax payer has to move up more than one band. This is in addition to giving unitary and police authorities across Wales a fair settlement and making provision, with the UK government, for a new scheme which will allow councils to retain an element of any growth in business rates - with some£13.4m extra being paid to local government in 2005-06.'

In a written statement the minister said: 'I have already set out my broad expectations for what would be a reasonable upper limit for budgets. I am encouraged that for many authorities, their anticipated increase is broadly in line with my expectations.

'As authorities finalise their budget preparations it is necessary that I provide this clear definition of the maximum limits that I expect. So that there is no room for doubt, this is set out in the form of draft principles under Section 52B of the Local Government Finance Act 1992.

'Although the legislation does not require me to consult, I wish to give authorities an opportunity to express their views and ensure that there is a common understanding of the basis on which the figures for 2004-05 and 2005-06 are defined. In preparing these principles I have relied on extensive dialogue with finance officers in unitary and police authorities and am grateful to them. I have agreed with the Welsh Local Government Association that the consultation should close on 17 February.

'If following the consultation period it is necessary to proceed, it would be my intention to seek formal approval of the principles by the Assembly. Once unitary authorities have set their budgets I will consider those budgets against the principles.'

Notes

The principles are set differently for each category of authority:

For unitary authorities, recognising that the circumstances for each authority are different, there are two draft principles that would both have to apply for an authority's budget requirement to be regarded as excessive:

* set a budget which exceeded a 5.4% increase overall

* exceeded its percentage increase in SSA plus 0.4%

The SSA (standard spending assessment) is a mechanism used to inform the distribution of resources between local authorities.

For police authorities, there are also two draft principles that would both have to apply for an authority's budget requirement to be regarded as excessive:

* set a budget which exceeded a 5% increase overall

* set a council tax precept greater than 5%

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