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Redundancy funding was 'scaled back'

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Local authorities applied for more than £200m of capitalisation money to pay redundancy costs in 2010-11 but received only 38% of what they needed, according to official figures.

Of the 65 councils who applied, 61 were awarded part of the amount they had requested and were able to share part of a £83m pot, while four authorities were refused completely.

As well as the £83m to cover redundancy costs, the Department for Communities & Local Government also approved £52m for pension fund contributions and £20m for “exceptional” costs.

In total, 145 councils applied for more than £533m, but DCLG permitted the use of just £155m.

DCLG documents state that the amount requested was not judged to be “affordable” by the secretary of state and the vast majority of applications were partially approved as a result.

“Following a high level of demand from authorities, capitalisation directions issued for statutory redundancy and pension costs have been scaled back to 38% of the amount requested, and exceptional financial difficulties directions to 70% of the amount requested,” according to the department.

The £155m approved in 2010-11 compares to the £200m that the department has set aside for capitalisation in 2011-12.

The Local Government Association, which argues that closer to £2bn is needed to cover the cost of thousands of redundancy, has been lobbying for councils to be allowed to decide their own capitalisation limits.

Last week, DCLG issued a short advice note on next year’s funding but indicated that the full rules around 2011-12 capitalisation would be issued in February.

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