Mr Robert Hay
Local Government Finance Revenue Branch
Welsh Assembly Government MSO/PMC
Ground Floor 22 November 2006
Cathays Park Mark S Owen
Cardiff CF10 3NQ 01978 292704
mark.owen@wrexham.gov.uk
Dear Mr Hay
Local Government Revenue and Capital Settlement 2007/08
Thank you for the opportunity to comment on the provisional settlement. I detail below my
comments:
The Overall Settlement
1. The average increase of 4.3% is welcomed as the constraints on central government are
recognised. However, such a level will not enable the Council to provide services at a level
demanded by the people of Wrexham. Although additional monies have been included in the
settlement to address pressures in the social care system, special educational needs, refugees
and migrant workers and landfill tax, the amounts involved provide only stop gaps are not
addressing the fundamental funding shortfalls of many of these demand led services. in the
areas of repairs and maintenance, schools highways and waste management and inflation (e.g.
energy costs).
2. The level of settlement increase for Wrexham of 4.2% is more reasonable than in recent years.
However, even with this level of WAG support there will be cuts in all services in the order of
£3m. The Council will endeavour to protect delegated school budgets but given cumulative
impact of the year on year saving this is increasingly difficult.
Council Tax – ongoing impact of Revaluation
3. The nature of the Revaluation process resulted in Wrexham residents having a comparatively
higher amount to pay for the same services. It must be recognised that this is inbuilt into the
system now but that service levels are being squeezed through lack of resources
Medium Term Financial Planning
4. The development of three year revenue and capital settlements for local authorities from
2008/09 is welcomed. It will be essential that guidance is available by June 2007 at the latest
to enable budgets to be planned accordingly.
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Efficiency Savings
5. I am again concerned at the treatment of the 1% efficiency saving which has been removed
from the overall local government allocation prior to distribution. The savings amount has not
been top-sliced in England and authorities are able to make savings during the year. Savings
do not all have to be in cash and are returned to services. It would appear that Welsh
Authorities are being disadvantaged. Furthermore the prescription in terms of school savings
is unfortunate. This should be left to local discussion. If further resources are incorporated
into the Final Settlement in lieu of school savings it is suggested that they should be added to
the RSG and distributed by formula rather than included as a specific grant.
Local Authority Business Growth Incentive Scheme (LABGI)
6. We continue to welcome the additional resources to be provided through the LABGI scheme
that we have used to fund our budget, which is a risk for the Council given that the scheme is
for a three period only. An extension to this scheme or something similar would be
welcomed.
Specific Grants & General Payment Arrangements
7. The number of specific grants and the associated administration should continue to be
reduced. I have concerns about late notification of grants and the lack of consultation in some
cases e.g. Raise grant. In addition it would greatly assist authorities if the WAG payment
arrangements provided more information to identify the nature and timing of payments.
Deprivation and Performance Incentive Grant
8. The Council welcomes the continuation of the extra un-hypothecated resources provided by
the deprivation and performance incentive grants and the increase for inflation. However,
given the improvements introduced to the general distribution formula I cannot understand
why these amounts cannot be simply incorporated into the total sum to be allocated as part of
the overall distribution. Any reconsideration of the PIG for 2008/09 should take account of
the fact it is now incorporated into base budgets.
Fire Pension Changes
9. The changes being discussed between Westminster and WAG should not disadvantage
authorities. Any “gap” should not be top sliced from Local Government.
Equal Pay
10. The scale of the impact of the equal pay review (particularly back pay claims) has not been
adequately recognised in the Provisional Settlement. Clearly it is inequitable for NHS equal
pay type issues to be funded centrally whist Local Government is not treated so favourably.
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Capital
11. The additional capital resources are welcomed. However in terms of schools building
requirements, housing stock improvements and the transport infrastructure then they are too
low to make a significant difference. The nature of the £15m for local roads maintenance
requires clarification and distribution proposals should be consulted on with the WLGA.
DSG Formula
12. Councillors in Wrexham consider the current distribution arrangements do not fairly identify
the needs of North East Wales. This is particularly due to regression techniques being used to
match to historic expenditure levels (which are suppressed). Research on more needs based
elements within the formula should be progressed.
Yours sincerely
Chief Finance & Performance Officer
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