2005 06 LOCAL GOVERNMENT FINANCE SETTLEMENT FOR CONSULTATION
Document Sample
Briefing for Executive Committee – 7 December 2004
2005/06 LOCAL GOVERNMENT FINANCE SETTLEMENT FOR
CONSULTATION – KEY FACTS
National Picture
Headlines
1. The Minister of State for Local Government on 2 December announced the
proposed local government finance settlement for 2005/06. The key features
are:
(a) A £3.5 billion increase (over 2004/05) in councils‟ total of Government
grants – a 6.2% increase in cash terms. The increase in Formula Grant is
5.4%.
(b) An extra £637m beyond the figures in the 2004 Comprehensive Spending
Review. This includes an extra £358m in Revenue Support Grant. There
is new money of £100m for safeguarding children and £100m for access
and systems capacity (for 2005/06 only). There is £28m extra for Fire to
enable authorities not to repay transitional funding.
2. Ministers have made clear they expect to see a national average increase in
council tax of less than 5%. They have said they are “prepared to take even
tougher capping action next year” to ensure that tax increases are in line with
their expectations.
3. The government has changed the judgmental part of grant formula to benefit
shire district, police and fire authorities at the expense of shire counties.
4. The government has issued an “amending report” for 2003/04 to effect a
correction to mid-2001 population data. This has resulted in a claw-back of grant
from counties of £26m. Suffolk‟s loss of grant is £1.1m. The “amending report”
for 2004/05 will not be issued for another 12 months.
Supporting Information
5. Ministers have decided not to meet individual authorities this year. They will be
meeting the major groups representing local authorities and be receiving written
representations in the usual way.
6. The Government expects all authorities to pass their schools‟ FSS increase on to
their schools budget, other than in wholly exceptional circumstances.
7. From April 2005, authorities will be given further opportunities to increase locally
raised revenue through the Local Authority Business Growth Incentives Scheme.
This allows authorities to retain a proportion of growth in business rate revenue,
with total freedom to spend this on locally determined priorities.
8. The Government will support authorities in promoting the take-up of council tax
benefit. Information on benefit take-up will be included with the winter fuel
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payments and on council tax bills. Ministers have confirmed the intention of
developing proposals to streamline the claims process for pensioners.
9. In April, the government announced a one-off payment (for 2004) of £100 per
household, with someone aged 70 or over, in recognition of the impact of the
Council Tax on older people. The chancellors pre-budget statement included a
further one-off payment of £50 in 2005 for households with someone aged over
70.
Settlement for Suffolk County Council
Headlines
10. The changes for Suffolk (after adjusting the 2004/05 base for transfers of finance
and function) are:
a) Increase in Formula Spending Share (FSS) £39.2m, or 6.7%
b) Increase in Formula Grant £26.8m, or 6.7%
11. The three tables appended to this report show the changes in grant by county
council, region and class of authority.
12. One of the causes of the increased grant in 2005/06 is due using updated New
Earnings Survey (NES) data in the calculation of the Area Cost Adjustment
(ACA). This has resulted in an increase to total grant of approximately £2m.
13. It should be noted that detailed analysis work of the data is continuing to
determine the full impact of the Settlement notification to Suffolk.
Schools
14. The increase to be “passported” to schools is £17.6m (6.3%).
15. The county council is also entitled to £1.5m of Transitional Support Grant. This is
the second year of a grant aimed at alleviating specific schools‟ deficits caused
by funding problems in 2003/04 and 2004/05.
Social Care Specific Grants
16. The Access and Systems Capacity grant has received a one-off increase (for
2005/06 only) of £0.6m. The total to be received is £1.7m.
17. The allocation formula has changed for the Mental Health grant with the result
that the amount in 2005/06 will be £0.114m less.
18. There will be a reduction in the grant for „Supporting People‟ as follows:
Main Programme: -£1.188m (6% reduction)
Infrastructure Grant -£0.165m (20% reduction)
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Grant increases for other Authorities in Suffolk
19. The grant increases for Suffolk‟s district and borough councils and the police
authority are:
Babergh 6.0%
Forest Heath 2.5%
Ipswich 3.0%
Mid Suffolk 4.5%
St Edmundsbury 4.0%
Suffolk Coastal 3.2%
Waveney 3.6%
Suffolk Police 3.7%
Further information
20. Full details of the government‟s settlement for consultation can be found on:
http://www.local.odpm.gov.uk/finance/0506/grant.htm
Bill Banks
Head of Strategic Finance
7 December 2004
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% Grant Increase - Regional Comparison
7.00%
Includes
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6.00%
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South West South East London Eastern East West Yorkshire North East North West
GOR GOR GOR GOR Midlands Midlands and GOR GOR
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% Grant Increase - Class of Authority Comparison
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Suffolk
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