15 October 2004
Local government leaders are to step up their campaign for more government cash in November's revenue support grant settlement, as ministers indicate that they will be looking for average council tax rises as low as 4%.
The two sides were due to meet at Leeds Castle for a two-day central/local partnership meeting on October 14 and 15. High on the agenda were the RSG and council tax, with ministers likely to plump for average increases of 4%–5%.
The Local Government Association has been warning that councils will be unable to keep tax levels low after the Spending Review outlined an annual real-terms increase of 2.6% from 2004 to 2008. Funding will increase from £43.7bn to £51bn in 2007/08 while councils are also expected to find efficiency savings of £6.5bn.
'It is quite clear that low single figures are not possible,' Sarah Wood, the LGA's director of economic and environmental policy, told Public Finance. 'There is room for manoeuvre but only with additional funds.' The government will be reluctant to offer a fresh cash injection, but will also be anxious to avoid a clash over council tax during an election campaign.
One solution, sources suggest, is a change to the system of ceilings, perhaps introducing a 'sloping' system to take in councils' population increases.
Currently, there is a floor on funding, guaranteeing all councils a minimum increase, but this is funded by a ceiling to limit maximum increases. Authorities with large education and social service responsibilities claim they have lost millions of pounds, while authorities in the middle can also have their grant 'scaled down' to fund the floor. The LGA has campaigned against ceilings.
Nick Raynsford, the local government minister, confirmed this week that he was 'not averse' to revisiting the controversial system. 'I am certainly open to looking at different ways of achieving the necessary clawback to pay for the cost of the floor,' he told the Society of Local Authority Chief Executives.
'What I can't offer is an entirely magical solution. If you want a floor it has to be paid for. I am certainly willing to look at ways in which it can be best achieved in the most equitable way.'
PFoct2004
